Exhibit 10.1


 


SUB-SUBLEASE AGREEMENT


 


THIS SUB-SUBLEASE AGREEMENT (“Sub-sublease”) is
made this 30th day of May, 2008, by and between PROSODIE INTERACTIVE
CALIFORNIA, INC., (“Sub-sublandlord”) and Enernoc, Inc.  (“Sub-Sub-Tenant”)


 


1.   Premises.
Sub-sublandlord agrees to Sub-sublease to Sub-subtenant, and Sub-subtenant
agrees to Sub-sublease from Sub-sublandlord, approximately 8,766 rentable
square feet  (“RSF”) of space located on
the eastern side of the 4th floor of the building located at 500
Howard Street, San Francisco, CA 94105, as shown on the floor plan attached
hereto as Exhibit A (“Premises”).


 


2.   Master Lease, Sublease and Other
Agreements. Except as specifically set forth
herein, this Sub-sublease is subject and subordinate to all of the terms and
conditions of the Master Sublease, dated October 31, 2006, between Sun
Microsystems, Inc., (‘‘Master Sublessor”) and Sub-sublandlord and the
lease dated November 3, 2000 as amended (“Master Lease”) between Utah
State Retirement Investment Fund, as the “Lessor” (“Master Lessor”), and Master
Sublessor.   A copy of the Master
Sublease is attached hereto as Exhibit B and incorporated herein by this
reference except that the following sections of the Master Sublease are not
incorporated herein: Sections 1.1 through 1.19; Sections 2.1 and 2.3; Article 3;
the first sentence of Section 4.1; Sections 4.2 and 4.3;Section 4.6;
Sections 5.1 through 5.3; Article 6; Sections 7.1 and 7.2; Article 12;
Section 13.2.1; Sections 14.1 and 14.4; Article 15; Article 16; Section 18.3;
Section 18.4; Section 18.5;  Section 18.7
and Section 18,9.  Where
incorporated into this Sub-sublease, the terms “Sublandlord”, “Subtenant”, “Premises”
and “Sublease” in the Master Sublease shall refer to “Sub-sublandlord”, “Sub-subtenant”,
“Premises” and “Sub-sublease”.  A copy of
the Master Lease is attached hereto as Exhibit C and is incorporated
herein by this reference to the extent incorporated into the Master Sublease by
Section 13.1 of the Master Sublease. Sub-sublandlord
represents and warrants to Sub-subtenant that (i) the Master Sublease is
in full force and effect and has not been amended, (ii) the Expiration
Date of the Master Sublease is March 31, 2012, and (iii) Sub-sublandlord
is not aware of any default (or the occurrence of any events which would
constitute a default with the passage of time) on the part of (A) Sub-sublandlord
or Master Sublessor under the Master Sublease or (B) Master Sublessor or
Master Lessor under the Master Lease.


 


Notwithstanding
anything to the contrary in the Master Sublease or the Master Lease, in no
event shall Sub-subtenant have any liability, or responsibility, for the
removal or restoration for any alterations, improvements, or additions that are
in existence as of the date of this Sub-sublease.  In addition, Sub-subtenant shall not be
obligated to (i) pay the Rent to be paid by Sub-sublandlord under the
Sublease, (ii) cure any default of Sub-sublandlord under the Sublease, (iii) perform
any obligation of Sub-sublandlord under the Sublease which arose prior to the
Commencement Date and Sub-sublandlord failed to perform, (iv) repair any
damage to the Premises, or cure any violation of law, caused by Sub-sublandlord
or existing prior to the Commencement Date, (v) indemnify Master Lessor or
Master Sublessor with respect to any act, omission, negligence or willful
misconduct of Sub-sublandlord, its agents employees or contractors, (vi) pay
late fees, interest or damages due under the Master Sublease which relate to
the acts, omissions, willful misconduct, negligence or default of
Sub-sublandlord under the Master Sublease, (vii) separately meter the
Premises for utility service, (viii) provide its own janitorial services.


 


Sub-sublandlord
agrees not to voluntarily terminate the Master Sublease before the expiration
of the Term (as defined below). With respect to the, Sub-subtenant shall be
entitled to all utilities, repairs and services furnished by Master Lessor
under the Master Lease and Master 


 

















 


Sublessor under the
Master Sublease.  Sub-sublandlord agrees
to make reasonable and diligent efforts to enforce Master Lessor’s obligations
under the Master Lease and Master Sublessor’s obligations under the Master
Sublease, to the extent that Sub-Subtenant is a beneficiary thereof.  Whenever the consent of the Landlord is
required under the Master Lease and/or consent of the Sublandlord under the
Sublease, and whenever the Landlord fails to perform its obligations under the
Master Lease or Sublandlord fails to perform its obligations under the
Sublease, Sub-Sublandlord agrees to use its reasonable, good faith efforts to
obtain that consent or performance on behalf of Sub-Subtenant.


 


3.   Commencement Date.  The
Commencement Date of the Sub-sublease shall be upon the later of (i) delivery
of possession of the Premises to Sub-subtenant in the condition required
hereunder and (ii) receipt by Sub-subtenant of the written consent of both
the Sub-Landlord (Sun MicroSystems, Inc.) and the Master
Landlord (Utah State Retirement Investment Fund) (the “Consents”) estimated to
be on or about June 1, 2008.  If
Sub-sublandlord is unable to deliver possession of the Premises and the
Consents by July 31, 2008, Sub-subtenant shall have the option to
terminate the Sub-sublease.


 


4.   Term.


 


(a)  The term of
this Sub-sublease (“the Term”) shall be for a period the Commencement Date, and
shall expire on February 28, 2012 (the “Expiration Date”) unless sooner
terminated pursuant to any provision of the Master Sublease or Master Lease
applicable to the Premises (the “Expiration Date”).


 


(b) Early Access.  Sub-subtenant shall
have the right of early access to the Premises, rent free, beginning on June 1,
2008, for the purpose of inspecting and planning the configuration and
installation of its IT and telephone equipment, wiring, etc.  Sub-subtenant shall not be charged for rent,
electricity or any other service during the Early Access period, provided
special building services are not requested in order for Sub-subtenant to
perform their own work.


 


5.   Rent.  Rent shall
commence thirty (30) days from Commencement Date.


 


(a) Sub-subtenant shall
pay to Sub-sublandlord each month during the Term of this Sub-sublease, base
rent (“Base Rent”) as follows:


 


	
  Year 1:

  	
   

  	
  $38.00 PSF

  	
   

  	
  $27,759.00 per month

  
	
  Year 2:

  	
   

  	
  $39.00 PSF

  	
   

  	
  $28,489.50 per month

  
	
  Year 3:

  	
   

  	
  $40.00 PSF

  	
   

  	
  $29,220.00 per month

  
	
  Year 4:

  	
   

  	
  $41.00 PSF

  	
   

  	
  $29,950.50 per month

  



 


(b)     Base
Rent shall be abated for the first full calendar month of the Term.  Monthly Base Rent is due and payable on or
before the first of each month thereafter. If the Commencement Date is not the
first day of the month, then Sub- subtenant shall pay the prorated Base Rent
for the first partial month on the Commencement Date. The rent shall be paid to
Sub-sublandlord at the address set forth in Section 16 of this
Sub-sublease, or at such other place as Sub-sublandlord may designate, in
advance, on the first day of each and every month throughout the term of this
Sub-sublease without any notice, set off, or deduction whatsoever except as
permitted hereunder.


 


(c)     Operating
Costs and Taxes.  Sub-subtenant shall
receive a 2008 Base Year and commencing January 1, 2009, shall pay its
proportionate share of all Operating Costs and Taxes outlined in the underlying
Sublease and Master Lease in excess of Operating Costs and 


 


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Taxes
for the 2008 Base Year. Sub-subtenant’s proportionate share shall be the ratio
which the rentable area of the Premises bears to the rentable area of the
Master Premises, which ratio is agreed to be 3.91% as of the date of this
Sub-sublease based on 8,766 rentable square feet of the Premises and 223,681
rentable square feet of the Master Premises. Said sums (including any estimates
of such sums) shall be paid to Sub-sublandlord at the times required pursuant
to the terms and conditions of the Master Sublease. Sub-sublandlord shall
provide Sub-subtenant with full and complete copies of Master Lessor’s annual
reconciliation statements of Operating Costs and Taxes provided to
Sub-sublandlord under the Master Sublease promptly following Sub-sublessor’s
receipt of the same from Master Sublessor. Sub-subtenant shall have the ability
to request and receive after-hours HVAC in the Premises and Sub-sublandlord
shall pursue such request with Master Sublessor upon Sub-subtenants request.
Current building hours are Monday to Friday from 7:00 am until 6:00 pm and
Saturday from 9:00 am to 1:00 pm. After-hours HVAC cost is currently $150 per
hour with a 4 hour minimum; 72 hours notice required.


 


(d) Late
Charge. If any rent is not paid within seven (7) days after the due date,
Sub-Subtenant shall pay a late charge to Sub-sublandlord equal to 2% of the
overdue payment and interest on such amount at the Interest Rate (as defined in
the Master Lease).  Neither demand for,
nor receipt of, any late charge called for under this sub-sublease will: (i) operate
to waive any obligation to pay Rent; or (ii) limit the exercise of any
other right or remedy Sub-sublandlord may have under this Sub-sublease in case
of Sub-subtenant’s Default.


 


6.   Security Deposit and
Prepaid Rent.   Sub-subtenant
shall pay a one (1) month security deposit to Sub-sublandlord in the form
of check in the amount of Twenty Seven Thousand, Seven Hundred Fifty Nine
($27,759.00) Dollars.  Sub-subtenant
shall not be paid any interest on such deposit. 
Security deposit shall be returned to Sub-subtenant upon the expiration
of the Sub-sublease term, provided the Premises is returned in acceptable
condition; normal wear and tear expected.


 


7.   Use of Premises; Parking;
Improvements. Sub-subtenant shall use the Premises only for general
office use and any other use currently permitted by the Master Lease.
Sub-subtenant shall properly observe and comply with all laws with respect to
Sub-subtenant’s use of the Premises to the extent required under the Master
Sublease.


 


(a)  Furniture,
Fixtures & Equipment (FF&E):  Sub-subtenant shall have the right
to use the existing FF&E in the Premises throughout the term of the
Sub-sublease.  Sub-subtenant shall also
have the right to purchase the existing FF&E in the Premises at the end of
the lease term at a price to be negotiated within six (6) months but in no
event two (2) months from Sub-sublease expiration.  Sub-subtenant shall provide Sub-sublandlord
with written notice of its intent to purchase or not purchase the
furniture.  The existing furniture
inventory will exclude Sub-sublandlord’s Aeron chairs.  A final inventory list is attached hereto as Exhibit D.


 


(b)  Voice and Data: Sub-subtenant
shall be allowed to use and reconfigure the existing voice and data network
wiring during the term of the Sub-sublease. To the best of Sub-sublandlord’s
knowledge, the voice and data wiring are in good and operable condition.  Sub-subtenant shall be responsible for any
and all repairs and maintenance associated with such wiring and systems that
affect the Premises throughout the term of this Sub-sublease.


 


(c)  Parking
Rights: Sub-subtenant shall have the right to use seven (7) parking spaces
in the Building’s parking garage.


 


(d)  24
Hour Access: Sub-subtenant shall have access to the Building and the Premises,
seven (7) days a week, twenty four (24) hours per day, with electric
service being provided at all times. Sub-subtenant shall be responsible for any
charges associated with its 


 


3

















 


request for and usage of any after-hours HVAC
and utilities for the Premises.


 


(e)     Signage:
Sub-subtenant shall have the right to the building lobby directory, elevator
lobby and suite signage per Master Lessor’s standard signage program at
Sub-sub-subtenant’s cost.


 


8.     Alterations.  Subject to the terms of the underlying
Sublease and of the Master Lease, Sub-subtenant shall be permitted to make
alterations to the Premises with the prior approval of Sub-sublandlord, Master
Sublessor and Master Landlord’s approval. 
Sub-subtenant shall be responsible for the removal of any alterations
installed by Sub-subtenant upon expiration of the Sub-sublease term which will
be determined at the time of granting consent.


 


9.     Assignment; Subletting. Subject to the terms of the Master
Sublease and Master Lease, Sub-subtenant shall be permitted to Sub-sub-sublease
the Premises with Sub-sublandlord’s, Master Sublessor’s and Master Lessor’s
prior written approval which would not be unreasonably withheld or delayed.


 


10.   Insurance. Sub-subtenant shall maintain the insurance
required of the “tenant” under Section 11.1 in the Master Lease, provided,
however, that all rights and benefits specified for Master Lessor pursuant to
the Master Lease shall apply to and inure to the benefit of Master Lessor,
Master Sublessor and Sub-sublandlord.


 


11.   Condition and Delivery of Premises. Sub-sublandlord
shall deliver the Premises on the Commencement Date vacant of all occupants and
clean and free of debris.


 


12.   Relocation. Subject to and in accordance with the terms
of Section 18.3 of the Master Sublease, in the event that the
Sub-sublandlord is required to move to a Substitute Premises (as defined in the
Master Sublease), Sub-sublandlord will notify Sub-subtenant immediately upon
receiving notice from Master Sublessor of any possible relocation of the
Premises. Such relocation shall not entitle Sub-subtenant to terminate this
Sub-sublease so long as Master Sublessor or Sub-sublandlord agrees to pay the
costs of Sub-subtenant in relocating the Premises in accordance with Section 18.3
of the Master Sublease.  Such space shall
be of similar quality, size and attributes of the Premises.  Sub-sublandlord shall pay all relocation
costs, including without limitation, those identified in Section 18.3 of
the Master Sublease.


 


13.   Default. The
occurrence of any of the following shall constitute a material breach of this
Sub-sublease and a default by Sub-subtenant (a “Default”):


 


(a)  Sub-subtenant’s
failure to pay any installment of Base Rent, Additional Rent or any other
payment due hereunder within ten (10) days after receipt of notice from
Sub-sublandlord specifying such failure;


 


(b)  Sub-subtenant’s
failure to comply with any term, provision or covenant of this Sub- sublease,
Sublease or the Master Lease (other than the payment of Base Rent, Additional
Rent or any other payment due hereunder) for a period of ten (10) days
after written notice thereof; provided that the default cannot reasonably be
cured within a ten (10) day period, Sub-sub-subtenant shall have a
reasonable time to cure the default before Sub-sublandlord exercises its rights
under this Sub-sublease, provided that Sub-subtenant has begun affirmative and
reasonable efforts to cure the default within the initial ten (10) day
period and diligently pursues cure to completion;


 


4

















 


(c)  Sub-subtenant
becomes insolvent, transfers any property in fraud of Subtenant’s creditors, or
assigns its assets for the benefit of creditors;


 


(d)  Sub-subtenant
files a petition under any section of the Federal Bankruptcy Code, as amended,
or under any similar law or statute of the United States of any State thereof;
or Sub-subtenant is adjudicated a debtor or insolvent in proceedings filed
against Sub-subtenant under any laws or statutes;


 


(e)  If any court
appoints a receiver or trustee for all or substantially all of
Sub-sub-subtenant’s assets; or


 


(f)  The
Sub-sublandlord may exercise, without limitation of any other rights and remedies
available to it hereunder or at law or in equity, and all rights and remedies
of Landlord set forth in the Master Lease in the event of a default by the
tenant hereunder. No receipt of moneys by Sub-sublandlord from Sub-subtenant
after the exercise by Sub-sublandlord of its rights and remedies in the event
of a default hereunder (including, without limitation, the termination of this
Sub-sublease) shall in any way extend the term of this Sub-sublease or
Sub-subtenant’s right of possession hereunder, nor shall the giving of any
notice thereafter reinstate, continue, or extend the term or affect any notice
given to Sub-subtenant or any suit commenced or judgment entered prior to
receipt of such monies, except to the extent expressly agreed to by Sub-sublessor.


 


14.   Consent of Master
Sub-sublandlord and Master Lessor. The Master Lease and Master
Sublease requires that Sub-sublandlord obtain the consent of Master Lessor and
Master Sublessor to any subletting by Sub-sublandlord. This Sub-sublease shall
not be effective unless and until Master Lessor and Master Sublessor sign a
consent to this subletting satisfactory to Sub-sublandlord and Sub-subtenant.
Sub-sublessor agrees that the consent of the Master Lessor must contain an
acknowledgement of the parking rights granted to Sub-subtenant under Section 7(c) below.  If either Master Lessor or Master Sublessor
fails to consent to this Sub-sublease, including the parking rights, by July 31,
2008, then Sub-subtenant may terminate this Sub-sublease by written notice to
Sub-sublandlord and in such event neither party shall have any obligations to
the other party under this Sub-sublease.


 


15.    Subtenant’s Insurance and Indemnity.
Sub-subtenant hereby waives claims against Master Lessor, Master Sublessor and
Sub-sublessor for death, injury, loss or damage of every kind and nature, if
and to the extent that Sub-sublandlord waives or releases such claims against
Master Sublessor under the Master Sublease or Master Lessor under the Master
Lease. Sub-sublandlord and Sub-subtenant shall each procure an appropriate
clause in or endorsement to any property insurance covering the Premises (and
the premises subleased under the Master Sublease) and personal property,
fixtures and equipment located therein, wherein the insurer waives subrogation
or consents to a waiver of right of recovery, and, notwithstanding anything to
the contrary contained herein, Sub-sublandlord and Sub-subtenant agree not to
make any claim against, or seek to recover from, the other for any loss or
damage to its property or the property of others resulting from fire or other
hazards to the extent of coverage by such property insurance; provided,
however, that the release, discharge, exoneration and covenant not to sue
contained herein and in the Master Lease shall be limited by and be coextensive
with the terms and provisions of the waiver of subrogation or waiver of right
of recovery. Sub-subtenant acknowledges that Sub-sublandlord shall not carry
insurance for and shall not be responsible for Sub-subtenant’s furniture,
fixtures, equipment or other property, and any loss suffered by Sub-
Sub-subtenant due to the interruption of Sub-subtenant’s business.


 


Sub-subtenant shall indemnify, defend and hold
Sub-sublandlord harmless against 


 


5

















 


any claims, demands, judgments and awards, losses, liabilities and
expenses, including reasonable attorneys fees and costs, resulting from (i) the
negligence or willful misconduct of Sub-subtenant, its employees, agents and
invitees in the Building (ii) any act, omission or negligence of
Sub-subtenant, its employees, agents and invitees in the Premises, (iii) any
alterations or improvements made to the Premises, whether Sub- sublessor gave
its consent thereto or not (iv) any violations of applicable law by
Sub-subtenant; and (v) any Default. Sub-subtenant’s obligation to
indemnify and hold Sub-sublandlord harmless shall not extend to any portion of
a loss, judgment or award directly attributable to Sub- sublessor or its
agents, contractors’ or employees’ gross or active negligence or willful
misconduct provided that Sub-sublandlord give Sun-subtenant prompt written
notice of any such claim or threatened claim, and Sub-subtenant cooperates (at
no expense to Sub-subtenant) in any defense or settlement of such claim.
Sub-sublandlord’s and Sub-subtenant’s obligations under this Section shall
survive the expiration or termination of this Sub-sublease.


 


Sub-sublandlord shall indemnify, defend and hold
Sub-subtenant harmless against any claims, demands, judgments and awards,
losses, liabilities and expenses, including reasonable attorneys fees and
costs, resulting from (i) the negligence or willful misconduct of
Sub-sublandlord, its employees, agents and invitees in the Building (ii) any
act, omission or negligence of Sub-subtenant, its employees, agents and
invitees in the remainder to the premises subleased to Sub-sublandlord under
the Master Sublease, and (iii) any default by Sub-sublandlord under, or
early termination of, the Master Sublease.


 


To the fullest extent allowed by applicable law, in
the event of any breach of this Sub- Sublease by either party, each party shall
not be liable for any punitive, exemplary or consequential damages, including,
without limitation, any business interruption damages or loss of income or
profit there from, and all such remedies or damages are expressly waived.


 


16.   Notice. Any notice, approval,
request, consent, bill, statement, or other communication required or permitted
to be given, rendered, or made by either party hereto, shall be deemed given
five (5) days from when sent when received or personally refused, shall be
in writing, and shall be sent to the parties hereto by certified U.S. mail,
postage prepaid, return receipt requested, or a recognized overnight delivery
service such as Federal Express, at the following addresses:


 


	
  If
  to Sub-sublandlord:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PROSODIE INTERACTIVE CALIFORNIA, INC.

  	
   

  	
   

  
	
  855 SW 78th Avenue

  	
   

  	
   

  
	
  Suite 100

  	
   

  	
   

  
	
  Plantation, FL 33324

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
  Arlene Matthews

  	
   

  	
   

  
	
  Telephone:

  	
  954 671-6558

  	
   

  	
   

  
	
  Fax:

  	
  954
  671-6558

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If
  to Sub-subtenant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ENERNOC, INC.

  	
   

  	
   

  
	
  75 Federal Street, Suite 300

  	
   

  	
   

  
	
  Boston, MA 02110

  	
   

  	
   

  



 


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  Attention:

  	
  Julia Regan

  	
   

  	
   

  
	
  Telephone:

  	
  617 398-2202

  	
   

  	
   

  
	
  Fax:

  	
  617-227-9910

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EnerNOC, Inc

  	
   

  	
   

  
	
  500
  Howard Street,

  	
   

  	
   

  
	
  San
  Francisco, CA 94105

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
  Kiera Gilhooly

  	
   

  	
   

  
	
  Telephone:

  	
  415.343.9510

  	
   

  	
   

  
	
  Fax:

  	
  415.343.9559

  	
   

  	
   

  
					



 


Each
party shall have the right to designate by notice, in writing, any other address
to which such party’s notice is to be sent.


 


17.   Surrender. On
the date upon which the term hereof shall expire or come to an end, whether on
the Expiration Date, by lapse of time, or otherwise, at Sub-subtenant’s sole
cost and expense, Sub-subtenant agrees to surrender the Premises to
Sub-sublandlord, vacant of all occupants and personal property belonging to
Sub-subtenant, clean and free of debris, with ordinary wear and tear expected
at the end of the sublease term.


 


18.   Holding Over.
Sub-subtenant has no right to occupy the Premises or any portion thereof after
the expiration of the Term or earlier termination of this Sub-sublease.


 


In
the event Sub-subtenant or any party claiming by, through or under
Sub-subtenant holds over, Sub-sublandlord may exercise any and all remedies
available to it at law or in equity to recover possession of the Premises, and
to recover damages, including without limitation, all damages payable by
Sub-sublandlord to Master Sublessor by reason of such holdover. Without limiting
the damages recoverable under the foregoing sentence, for each and every month
or partial month that Sub-subtenant or any party claiming by, through or under
Sub-subtenant remains in occupancy of all or any portion of the Premises after
the expiration of the Term or earlier termination of this Sub-sublease,
Sub-subtenant must pay a holdover rent of 150% of the then existing Base Rent
for the first two (2) months of holdover. Beyond the initial two (2) month
period, Sub-subtenant’s holdover rent shall increase to 200% of its then Base
Rent for the Premises as minimum damages and not as a penalty. The acceptance
by Sub-sublandlord of any lesser sum will be construed as payment on account
and not in satisfaction of damages for such holding over.


 


19.   Severability. If any terms or
provisions of this Sub-sublease or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Sub-sublease or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or unenforceable,
shall not be affected thereby; and each term and provision of this Sub-sublease
shall be valid and be enforceable to the fullest extend permitted by law.


 


20.   Broker’s Commission. Studley, as
Sub-subtenant’s exclusive representative, shall be paid a commission equal to
One Dollar and fifty cents ($1.50) per RSF, per leased year.  Staubach, as Sub-sublandlord’s broker, shall
be paid a commission equal to Seventy five cents ($0.75) per RSF, per leased
year. Said commission shall be paid by Sub-sublandlord fifty (50%) percent upon
lease execution and fifty (50%) percent upon the Lease 


 


7

















 


Commencement.


 


21.   Governing Law. The validity, construction,
interpretation, and performance of the covenants and conditions contained
herein shall be governed by and construed in accordance with the domestic laws
of the State of California, excluding, however, such laws as pertain to
conflicts of law.


 


22.   Force Majeure. In no event shall  Sub-sublandlord be liable for failure to
perform any obligation under this Sub-sublease in the event that
Sub-sublandlord is prevented from so performing by strike, lockout, breakdown,
accident, order or regulation of or by any governmental authority, or failure
of supply, or because of war or other emergency, or for any similar dissimilar
cause beyond Sub-sublandlords reasonable control or for any cause due to any
act or neglect of Sub-subtenant or its servants, agents, employees, licensees,
or any person claiming by, through or under Sub-subtenant.


 


23.   Attorneys’ Fees. If either party hereto commences an action
against the other to enforce any obligation hereunder, upon the conclusion of
such action, the prevailing party will be entitled to recover from the
nonprevailing party, the prevailing party’s costs for such action, including,
but not limited to, reasonable attorney’s fees and court costs.


 


24.   Entire Agreement. This
Sub-sublease contains the entire agreement between the parties, and no rights
are created in favor of either party other than as specified or expressly
contemplated in this Sub-sublease, and the Master Sublease and Master Lease, to
the extent such is incorporated herein. In addition, no agreement shall be
effective to change or modify this Sub-sublease in whole or in part unless in
writing and duly signed by the party against whom enforcement of such change or
modification is sought.


 


IN WITNESS WHEREOF, the parties have hereto executed
this Sub-sublease on the date above written.


 


	
  SUB-SUBLANDLORD

  	
  SUB-SUBTENANT

  
	
  PROSODIE
  INTERACTIVE CALIFORNIA, INC.

  	
  ENERNOC,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY:

  	
  /S/ Marie Curtis

  	
   

  	
  By:

  	
  /S/ Neal Isaacson

  
	
   

  	
   

  
	
  TITLE: Chief Financial Officer

  	
  TITLE: Chief Financial Office

  
					



 


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EXHIBIT A


 


PREMISES


 


9

















 


EXHIBIT B


 


SUBLEASE


500 Howard Street, San Francisco CA


 


This
Sublease (“Sublease”), dated October 31, 2006 (the “Effective Date”), is
entered into by and between SUN MICROSYSTEMS, INC., a Delaware corporation (“Sublandlord”),
and PROSODIE INTERACTIVE, CALIFORNIA, a Delaware Corporation (“Subtenant”).


 


1.               BASIC SUBLEASE PROVISIONS


 


Premises: The Premises under this Sublease initially consist
of approximately seventeen thousand, nine hundred forty-five (17,945) rentable
square feet on floor 4 (the “Premises”), in the building commonly known as
Foundry Square IV, 500 Howard Street, San Francisco, California (“Building”).
The Premises demised hereunder consist of a portion of those certain premises (“Master
Premises”) consisting of approximately two hundred twenty-three thousand six
hundred eighty-one (223,681) retable square feet, which is demised pursuant to
the Master Lease. The Premises are depicted on Exhibit A
to this Sublease. The final rentable square feet of the Premises shall be
determined by Sublandlord’s architect using the “Standard Measure for Measuring
Floor Area in Office Buildings” published by the Secretariat, Building Owners
and Managers Association International (ANSI/BOMA Z65.1-1996), approved June 7,
1996.


 


Master Landlord: Utah State Retirement Investment
Fund/Cottonwood.


 


Master Lease: Lease Agreement dated November 3, 2000,
entered into by Sublandlord, as tenant, and K3 First Street Associates, LLC, a
California limited liability company, predecessor-in-interest to Master
Landlord, as lessor (therein refereed to as “Landlord”), as subsequently
amended by Amendment No. 1 dated November 30,2000 (“First Amendment”),
Second Amendment to Lease Agreement dated March 29,2002 (“Second Amendment”),
Third Amendment to Lease Agreement dated July 1, 2002 (“Third Agreement”),
Fourth Amendment to Lease Agreement dated February 26,2004 (“Fourth
Amendment”), and Fifth Amendment to Lease Agreement dated February_, 2005 (“Fifth
Amendment”) with respect to certain property commonly known as 500 Howard
Street, San Francisco, California (the “Property”). The Lease Agreement, First
Amendment, Second Amendment, Third Amendment, Fourth Amendment and Fifth
Amendment are attached hereto as Exhibit B
and are hereinafter collectively refereed to as the “Master Lease.”


 


Term: Approximately sixty (60) months beginning on the
Commencement Date and ending on the Expiration Date, unless terminated earlier
in accordance with the terms and conditions of this Sublease.


 


Estimated Commencement Date: Upon Substantial
Completion of Sublandlord work, but in no event later than One Hundred Thirty
Five (135) days after the Effective Date of this Sublease, subject to Force
Majeure.


 


Commencement Date: This Sublease shall be effective for all
purposes upon mutual execution and the Term shall begin on the Commencement
Date, which shall be the date upon which both of the following events have
occurred; (i) the date Sublandlord’s Work is Substantially Complete (as
both such terms are defined in the Work Letter); and (ii) the date the
Master Landlord delivers its written consent to this Sublease. In the event
that the Sublandlord is unable to deliver the Premises within One Hundred (100)
days after the Estimated Commencement Date, unless due to Subtenant Delay (as
defined in the Work Letter) or Force Majeure, then Subtenant shall have the
right to terminate this Sublease by giving written notice thereof to
Sublandlord, at no cost or penalty to Subtenant. In the event the Sublease
terminates pursuant to this Section 1.6, Sublandlord shall return
Subtenant’s Security Deposit and any Rent held by Sublandlord held within
forty-five (45) days of the Sublease termination.


 


Rent Commencement Date: Three (3) months
after the Commencement Date.


 


10
















 


Expiration Date: The last day of the calendar month in which
falls the fifth (5th) anniversary of the Commencement Date. Thus, if
the Commencement Date is the Estimated Commencement Date in Section 1.5
above, the Expiration Date will be December 31, 2011.


 


Base Rent: The Base Rent for the Premises shall be:


 


	
  Period

  	
   

  	
  Annual Rate Per

  Square Foot

  	
   

  	
  Annual Base Rent

  	
   

  	
  Monthly Base Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Subtenant’s Share: 8.02%


 


Improvement Allowance: NONE. See Work Letter
attached as Exhibit C to this Sublease.


 


Permitted Uses: General office use and any other use
currently permitted by the Master Lease.


 


Security Deposit: One (1) month of Base Rent based on an
annual rental rate of $35.50, totaling Fifty Three Thousand, Eighty Seven
dollars and 29/100 ($53,087.29).


 


Address Payment of Rent:


 


	
   

  	
   

  	
  Jones
  Lang LaSalle

  
	
   

  	
   

  	
  C/o
  Sun Microsystems, Inc.

  
	
   

  	
   

  	
  525
  William Penn Way, 20th Floor

  
	
   

  	
   

  	
  Pittsburg,
  PA 15259

  
	
   

  	
   

  	
  Attn.:
  Lease Administration

  
	
  Sublandlord’s Notice Address:

  	
   

  	
   

  
	
   

  	
   

  	
  Jones
  Lang LaSalle

  
	
   

  	
   

  	
  C/o
  Sun Microsystems, Inc.

  
	
   

  	
   

  	
  525
  William Penn Way, 20th Floor

  
	
   

  	
   

  	
  Pittsburg,
  PA 15259

  
	
   

  	
   

  	
  Attn.:
  Lease Administration

  
	
  With
  a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
  Sun
  Microsystems, Inc.

  
	
   

  	
   

  	
  4150
  Network Circle

  
	
   

  	
   

  	
  MS
  SCA12-202

  
	
   

  	
   

  	
  Santa
  Clara, CA 95054

  
	
   

  	
   

  	
  Attn.:
  Real Estate Counsel

  
	
  Subtenant’s Notice Address:

  	
   

  	
   

  
	
   

  	
   

  	
  Prosodie
  Interactive

  
	
   

  	
   

  	
  Prior
  to Commencement Date

  
	
   

  	
   

  	
  160
  Spear Street, Suite 330

  
	
   

  	
   

  	
  San
  Francisco, CA 94105

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  After
  Commencement Date:

  
	
   

  	
   

  	
  500
  Howard Street, 4th Floor

  
	
   

  	
   

  	
  San
  Francisco, CA 94105

  
	
   

  	
   

  	
  Attn.: Lease
  Administration

  
	
   

  	
   

  	
   

  
	
  Brokers: For
  Sublandlord:

  	
  Jones Lang LaSalle

  	
   

  	
   

  
	
   

  	
  For Subtenant:

  	
  The Staubach Company

  
	
   

  	
   

  	
   

  
	
  Guarantor: Prosodie
  S.A.

  	
   

  	
   

  
	
  Sublease Base Year: 2007

  	
   

  	
   

  
						



 


11

















 


Building Hours: 7:00 A.M. to 6:00P.M. during Business
Days (defined below), and (:00A.M. to 1:00P.M. on Saturdays, excluding Sundays
and Holidays (defined below).


 


Business Days: Monday through Friday of each week,
exclusive of New Year’s Day, President’s Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day (“Holidays”). Sublandlord may
designate additional Holidays, provided that any additional Holidays are
commonly recognized by other office building landlords in San Francisco.


 


The
Terms in the Basic Sublease Provisions are used in this Sublease as defined
terms and have the meanings given above. Other capitalized words and phrases
have the meanings given to them elsewhere in this Sublease or, if not defined
herein, the meanings described to them in the Master Lease. Unless otherwise
indicated, all section and exhibit references are to the sections and exhibits
of this Sublease.


 


2.     DEMISE OF PREMISES


 


Sublandlord hereby subleases the Premises to Subtenant, and Subtenant
hereby subleases the Premises from Sublandlord for the Term, on and subject to
the terms and conditions of this Sublease.


 


Sublandlord hereby assigns to Subtenant the non-exclusive right to use
the Common Areas within the Building and the Project in the same manner and
subject to the same conditions as Sublandlord is granted such rights under the
Master Lease.


 


Sublandlord hereby assigns to Subtenant its right to sublease up to
nine (9) parking spaces in the Parking Facility on the same terms and
conditions as apply to Sublandlord’s lease of such parking spaces under Section 1
of Exhibit “E” to the Master Lease (including, without limitation,
Subtenant’s payment of the Monthly Parking Rental). Subtenant shall contract
directly with Master Landlord for such parking spaces and any Monthly Parking
Rental shall be paid directly to Master Landlord and shall not constitute the
payment of Rent under this Sublease.


 


3.     TERM


 


The Term will commence on the Commencement Date specified in the Basic
Sublease Provisions. At Sublandlord’s request, Subtenant shall confirm, in writing
on such reasonable form as Sublandlord may provide, the exact date that the
Commencement Date occurred. If for any reason, the Commencement Date has not
occurred by the Estimated Commencement Date, Sublandlord will not be liable
therefore, nor will such failure affect the validity of this Sublease or the
obligations of Subtenant hereunder. Notwithstanding anything herein to the
contrary: (i) In the event that the Commencement Date is actually delayed
beyond the Estimated Commencement Date due to an act of Sublandlord or its
agents or due to a Sublandlord Delay as defined in Section 3.2 of the Work
Letter, then Subtenant shall be entitled to an additional day of free rent for
each day of such delay; and (ii) in the event that the Commencement Date
is actually delayed beyond the Estimated Commencement Date due to an act of
Subtenant or its agents resulting in a Subtenant Delay as defined in Section 3.2
of the Work Letter, then the free rent period between the Commencement Date and
the Rent Commencement Date shall be reduced for each day of such delay.


 


The Term will end on the Expiration Date, unless earlier terminated as
provided elsewhere in this Sublease, in which case the Term will end on such
earlier termination.


 


4.              RENT


 


4.1 The consideration payable by Subtenant for the Premises consists of
the Base Rent Specified in the Basic Sublease Provisions and the Additional
Rent set forth in Sections 4.3 and 4.4. Base Rent, Additional Rent and all
other amounts, however designated, required to be paid 


 


12

















 


or
reimbursed by Subtenant constitute and are collectively referred to as “Rent.”
Subtenant’s covenant to pay Rent will be independent of every other covenant in
this Sublease.


 


4.2 Beginning on the Rent Commencement Date and constituting thereafter
on the first day of each month during the Term, Subtenant must pay to
Sublandlord in advance, and without notice, demand, deduction or offset, the
monthly amount of the Base Rent. Subtenant must pay the first full month’s Rent
upon the Effective Date, and it the Commencement Date is not the first day of
the month, then the Subtenant must pay the prorated Base Rent for the first
partial month on the Commencement Date.


 


4.3  If in any calendar year
during the Term, the total amount of Operating Costs and Taxes (as defined in
the Master Lease) for the Building exceed the amount of Operating Expenses in
the Sublease Base Year, then Subtenant shall pay to Sublandlord, as “Additional
Rent”, an amount which is the product of (1) the amount of such increase
in Operating Expenses, multiplied by (2) Subtenant’s Share, Subtenant’s
Share of increases in Operating Expenses for any partial calendar year during
the Term shall be determined by multiplying the amount of Subtenant’s Share of
increase in Operating Expense for the full calendar year by a fraction, the
numerator of which is the number of days during such calendar year falling
within the Term and the denominator of which is three hundred sixty-five (365).
If in any calendar year during the Term, the amount of Taxes exceeds the amount
of Taxes for the Sublease Base Year, then Subtenant shall pay, as Additional
Rent, an amount which is the product of (1) the amount of such increase in
Taxes, multiplied by (2) Subtenants Share. Subtenant’s Share of increases
in Taxes for any partial calendar year during the Term shall be determined by
multiplying the amount of Subtenant’s Share of increase in Taxes for the full
calendar year by a fraction, the numerator of which is the number of days
during such calendar year falling within the Term and the denominators of which
is three hundred sixty-five (365).


 


4.4  Subtenant shall also pay as
Additional Rent, an amount equal to all expenses incurred by Sublandlord in
providing services to the Premises which are (i) required to be supplied
by Sublandlord under this Sublease but not by Master Landlord under the Master
Lease, or (ii) supplied by Master Landlord under the Master Lease upon the
condition that Sublandlord pay or reimburse Master Landlord for such services,
or (iii) not required by this Sublease but nevertheless furnished at the
request of Subtenant. Subtenant shall not be required to pay Additional, Rent
as a result of Sublandlord’s exclusive use and needs.


 


Additional
Rent shall be paid within ten (10) business days after the delivery to
Subtenant of an invoice therefore, except to the extent the Master Lease
Operating Costs and Taxes are payable by Sublandlord on an estimated basis, in
which case the Additional Rent in respect thereto must be paid in advance when
Base Rent is due without notice or invoice based on Master Landlord’s estimates
(provided, that Subtenant will be notified in writing of Master Landlord’s
estimates (provided, that Subtenant will be notified in writing of Master
Landlord’s estimates of Operating Costs and Taxes and any changes thereto).
Upon any reconciliation of estimated ad actual Master Lease Operating Costs and
Taxes, the corresponding Additional Rent must be adjusted between Sublandlord
and Subtenant (with appropriate reimbursements or additional payments) within
twenty (20) days after delivery to Subtenant of any reconciliation statement
under the Master Lease. For purposes of calculating Master Lease Operating
Costs and Taxes, Sublandlord will be entitled to rely conclusively on Master
Landlord’s determination of estimated and actual Master Lease Operating Costs
and Taxes, in the event that within ninety (90) days after Subtenant’s receipt
of the reconciliation statement, Subtenant reasonably believes that certain of
the Operating Costs and Taxes include costs that are not properly included
within the term Operating Costs and Taxes or Master Landlord has erred in
calculating the same, Subtenant may request in writing that Sublandlord, at
Subtenant’s sole expenses, exercise its rights to inspect and/or audit Master
Landlord’s books and records pertaining to Operating Costs and Taxes to the
extent permitted by Section 3.2 of the Master Lease (“Operating Costs
Audit”). Sublandlord may delay the commencement of any such Operating Costs
Audit until Subtenant deposits with Sublandlord a sum sufficient to cover
Sublandlord’s 


 


13

















 


estimated
expenses in connection therewith. If Sublandlord obtains any reduction from Master
Landlord pursuant to any audit of Operating Costs and Taxes under the Master
Lease, it shall make an appropriate adjustment, based on the amount actually
credited to it (less Sublandlord’s reasonable costs and expenses in procuring
such reduction in such expenses) and the period covered by such credit within
sixty (60) days after it receives any adjustment. Subtenant shall work in good
faith to resolve any questions it may have relative to operating expense. If
Subtenant is unable to resolve its questions, it may audit Sublandlord’s books
at a location designated by Sublandlord during normal business hours. Subtenant
shall receive reimbursement of its commercially reasonable audit costs if it is
overcharged by more than five percent (5%) of the actual operating expenses
during the prior year. Subtenant’s auditor shall not be contingency based. If
Subtenant does not find a discrepancy greater than five percent (5%), Subtenant
shall pay the commercially reasonable Sublandlord costs to oversee the audit. If
Master Landlord receives a reduction of its prior year or years Real Estate
Taxes due to an Ad Valorem tax protect (commonly known as a Proposition 8
reduction) and Sublandlord receives a reduction in its prior years Real Estate
Taxes as a result, Subtenant shall also receive its prorate share of any
reduction in its prior years Real Estate Taxes that it had previously paid to
Sublandlord.


 


4.5 All
Rent must be paid to Sublandlord at the Address for Payment of Rent specified
in the Basic Sublease Provisions, or to such other person or such other place
as Sublandlord may from time to time designate by giving notice in writing.


 


4.6 If
any Rent is not paid within five (5) days after the date when due,
Subtenant must pay a late charge to Sublandlord equal to all interest and late
charges as Sublandlord would sustain under the Master Lease in the event that
Sublandlord were delinquent in paying such amount under the Master Lease.
Neither demand for, nor receipt of, any late charge called for under this Sublease
will: (i) operate to waive any default by Subtenant or provide a
substitute for Subtenant’s full and timely performance of the obligation to pay
Rent; or (ii) limit the exercise of any other right or remedy Sublandlord
may have under this Sublease in case of Subtenant’s Default.


 


5.              CONDITION
AND USE OF PREMISES


 


5.1
On or before the Commencement Date, Sublandlord agrees to perform, at its cost,
that certain improvement work defined as “Sublandlord Work” in the Work Letter
attached as Exhibit C in the accordance
with the terms and conditions of the Work Letter. Except for the Sublandlord
Work, Sublandlord shall have no obligation to improve or otherwise modify the
Premises for Subtenant’s use. Subject to Sublandlord’s obligation to complete
the Sublandlord Work, Subtenant shall accept the Premises in the “as is” and “with
all faults” condition as of the Effective Date, including but not limited to
title, physical condition, size or dimensions of the Premises, and the zoning,
building and land use restrictions applicable to the Premises.  Subtenant acknowledges that Sublandlord has
not made any representations, warrantless or promises to Subtenant regarding
the Premises or the Building. Sublandlord shall deliver the Premises in a
condition suitable for occupancy with all work that has been defined as “Sublandlord’s
Work” ad shall be compliant with current building codes and regulations as of
the Commencement Date. Within the first year of the term, Sublandlord shall
coordinate with its contractor for correction of any commercially reasonable
defects in the construction of the Premises that Subtenant identifies to
Sublandlord.


 


5.2  The Premises may be used and occupied solely
for the Permitted Uses specified in the Basic Sublease Provisions. Subtenant
must not use or suffer or permit the Premises to be used for any other purpose
except with Master Landlord’s and Sublandlord’s prior written consent, which
either or both of Master Landlord and Sublandlord may withhold in its or their
sole and absolute discretion.


 


5.3  Subtenant specifically agrees that it shall
maintain, repair and replace all fixtures and improvements to the Premises
(including supplemental HVAC, if any, serving the Premises) 


 


14

















 


in
the same condition and manner that Sublandlord is required to maintain, repair
and replace such fixtures and improvements under the Master Lease.


 


5.4 Security
Services.


 


5.4.1 Subtenant acknowledges that under the Master
Lease, Master Landlord (and not Sublandlord) is the party responsible for
providing in accordance with the standards observed by other comparable first
class office buildings in the South Financial District: (i) a lobby
security guard, including, without limitation, all base salary, bonus,
benefits, and the costs of related improvements, fixtures and equipment in the
lobby of the Building, as well as the reasonable cost of providing security on
multi-Subtenant floors, shall be an Operating Cost under the Sublease.
Subtenant acknowledges that Subtenant (and not Master Landlord or Sublandlord)
shall be solely responsible for providing security services to and in the
Premises.


 


5.4.2 Notwithstanding the provisions of 5.4.1 above,
Subtenant acknowledges and agrees that neither Master Landlord’s agreement to provide
such security services or Master Landlord’s actual provision of the same shall
directly or indirectly create any liability (and Subtenant hereby waives any
claim based on any such liability) on the part of the Master Landlord or
Sublandlord to Subtenant or to any persons occupying or visiting the Premises
or the Building, or any other person or entity with respect to any loss by
theft, injury or loss of life, or any other damage suffered or incurred in
connection with any entry into the Premises or any other breach of security
with respect to the Premises or the Building.


 


5.5 Subtenant
must comply with all laws, ordinances, orders, rules and regulations of
all governmental authorities and of all insurance bodies and their fire
prevention engineers at any time in force, applicable to the Premises or to
Subtenant’s particular use or manner or use thereof, to the extent Sublandlord
is obligated to perform the same with respect to the Master Premises under the
Master Lease.


 


5.6 Subtenant
agrees to comply with all rules and regulations that Master Landlord has
made or may hereafter from time to time make for the Building or the Project.
Sublandlord and Subtenant will not be liable in any way for damage caused by
the non-observance by any of the other tenants of such similar covenants in
their leases or of such rules and regulations.


 


6.              SUBTENANT’S
INSURANCE AND INDEMNITY


 


6.1
Sublandlord shall not be required to maintain the insurance required under Section 11.2
of the Master Lease. Subtenant shall be required to maintain the insurance
required of “tenant” under Section 11.1 of the Master Lease and shall
comply with the requirements set forth in 11.3 of the Master Lease.


 


6.2
Subtenant hereby waives claims against Master Landlord and Sublandlord for
death, injury, loss or damage of every kind and nature, if and to the extent
that Sublandlord waives or releases such claims against Master Landlord under
the Master Lease. Sublandlord and Subtenant shall each procure an appropriate
clause in or endorsement to any property insurance covering the Premises and
personal property, fixtures and equipment located therein, wherein the insurer
waives subrogation or consent to a waiver of right of recovery, and,
notwithstanding anything to the contrary contained herein, Sublandlord and
Subtenant agree not to make any claim against, or seek to recover from, the
other for any loss or damage to its property or the property of others
resulting form the fire or tore hazards to the extent covered by such property
insurance; provided, however, that the release, discharge, exoneration and
covenant not to sue contained herein and in the Master Lease shall be limited
by and be coextensive with the terms and provisions of the waiver of
subrogation or the waiver of right of recovery. Subtenant acknowledges that
Sublandlord shall not carry insurance for and shall not be 


 


15

















 


responsible
for, (i) Subtenant furniture, fixtures, equipment or other property, and (ii) any
loss suffered by Subtenant due to the interruption of Subtenant’s business.


 


6.3
Subtenant shall indemnify, defend and hold Sublandlord harmless against any
claims, demands, judgments and awards, losses , liabilities and expenses,
including reasonable attorneys fees and costs, resulting from (i) the use
and occupancy of the Premises and the Building by Subtenant, its employees,
agents and invitees, (ii) any act, error, omission or negligence of
Subtenant, its employees agents and invitees in, on or about the Premises and
the Building, (iii) any alterations or improvements made to the Premises,
whether Sublandlord gave its consent thereto or not, (iv) any violations
of applicable law by Subtenant; and (v) any Default. Subtenant’s
obligation to indemnify and hold Sublandlord harmless shall not extend to any
portion of a loss, judgment or award directly attributable to Sublandlord or
its agents, contractors’ or employees’ gross or active negligence or willful
misconduct. Sublandlord’s and Subtenant’s obligations under this Section shall
survive the expiration or termination of this Sublease.


 


6.4
Subtenant hereby agrees to indemnify, defend and hold harmless Sublandlord and
Master Landlord on the same terms and conditions provided in the Master Lease
for Sublandlord (as the “tenant” thereunder) to indemnify the Master Landlord,
as if each of the Master Landlord and Sublandlord were “Landlord” thereunder;
provided, however, that Subtenant will have no obligation to indemnify, defend
or hold harmless either Master Landlord (subject to Master Landlord’s consent
hereto) or Sublandlord under such terms and conditions in the master Lease to
the extent that any of the claims, demands, liabilities or causes of action at
issue are caused by Master Landlord’s, Sublandlord’s or any of their respective
agents, contractors or employees, gross negligence or willful misconduct.


 


6.5
To the fullest extent allowed by applicable law, in the event of any breach of
this Sublease by Sublandlord, Sublandlord shall not be liable to Subtenant for
any punitive, exemplary or consequential damages incurred by Subtenant,
including, without limitation, any damages related to the interruption of
Subtenant’s business or loss of income or profit therefrom, and Subtenant
hereby releases Sublandlord from any and all such damages.


 


7.              ASSIGNMENT
AND SUBLETTING


 


7.1
Subtenant shall not assign, sublease, transfer or encumber any interest in this
Sublease or allow any third party to use any portion of the Premises
(collectively or individually, a “Transfer”) without the prior written consent
of Sublandlord, which consent shall not be unreasonably withheld, conditioned
or delayed. Without limitation, it is agreed that Sublandlord’s consent shall
not be considered unreasonably withheld if (i) the proposed Transferee
would not meet any condition specified in Section 14.2(b) of the
Master Lease; or (ii) Sublandlord is unable to obtain the consent of
Master Landlord to the proposed Transfer, if the proposed Transfer is not
otherwise permitted under the Lease without the Master Landlord’s consent.
Subtenant herby waives the provision of Section 1995.310 of the California
Civil Code, or any similar or successor laws now or hereinafter in effect, and
all other remedies, including, without limitation, any right at law or equity
to terminate this Sublease, on its own behalf and, to the extent permitted
under all applicable laws, on behalf of every proposed transferee. Any willful
or deliberate attempted Transfer in violation of this Section shall
constitute a Default by Subtenant without necessity of notice or any grace or
cure period and, at Sublandlord’s option, the attempted Transfer shall be void.
Consent by Sublandlord to one or more Transfer(s) shall not operate as a
waiver of Sublandlord’s rights to approve any subsequent Transfer. In no event
shall any Transfer release or relieve Subtenant from any obligation under this
Sublease.


 


7.2
In addition to the costs of Master Landlord reimbursable by Sublandlord to
Master Landlord under the Master Lease, Subtenant shall pay Sublandlord’s reasonable
actual


 


16

















 


out-of-pocket
costs (not to exceed $3,000) incurred in connection with the review of any
request for consent to a Transfer.


 


7.3
Any Transfer made by Subtenant in contravention of this Article 7 shall be
void or voidable, at Sublandlord’s option, and shall constitute and irrevocable
breach of this Lease without necessity of notice or opportunity of Subtenant to
cure.


 


7.4
Any Bonus Rent (defined below) realized by Subtenant under any sublease or
assignment shall be divided and paid as follows: fifty percent (50%) to
Subtenant and fifty percent (50%) to Sublandlord. “Bonus Rent” shall mean the
excess of (i) all consideration received by Subtenant on account of a
Transfer over (ii) the sum of the Rent and other charges payable by
Subtenant to Sublandlord under this Sublease, after deducting for any
sub-subtenant improvements, free rent, space planning fees and legal fees.


 


8.              REPAIR
AND ALTERATIONS


 


8.1
Subtenant shall, at its sole cost and expense, promptly perform all maintenance
and repairs to the Premises necessary to keep the Premises in good condition
and repair reasonably consistent with the quality of other similar tenancies in
the Building, reasonable wear and tear over the Term and damage by casualty
excepted, and otherwise in compliance with the provisions of the second
sentence of Section 7.1 of the Master Lease, except to the extent that
Sublandlord has expressly assumed any such repair obligation under this
Sublease. Subtenant’s repair obligations include, without limitation, repairs
to: (i) floor covering; (ii) interior partitions; (iii) doors; (iv) the
interior side of demising walls; (v) electronic, phone and data cabling
and related equipment (collectively, “Cable”) that is installed by or for the
exclusive benefit of Subtenant and located in the Premises or other portions of
the Building; (vi) any facilities serving Subtenant exclusively; and (vii) Alterations
performed by contractors retained by Subtenant, including related HVAC balancing.
All work shall be performed in accordance with the requirements of the Master
Lease.


 


8.1.1
Janitorial Services and Day to Day Services.


 


(a) Subtenant acknowledges that under the
Master Lease, Master Landlord (and not Sublandlord) is the party responsible
for providing janitorial services to the Building and, if requested in writing
by Subtenant, to the Premises. The Janitorial Services shall be provided
utilizing union labor and to a standard consistent with comparable first class
office building in the South Financial District. The reasonable cost of
providing the Janitorial Services to the Premises shall be an Operating Cost
under the Sublease.


 


(b) Subtenant acknowledges that under the
Master Lease, Master Landlord (and not Sublandlord) is the party responsible
for providing day to day services to the Premises of such types and in such
quantities as are customarily furnished by institutional owners of comparable
first class multi-tenant office buildings in the South Financial District
leases on a so-called “fully serviced” basis (the “Standard Services”). The
Standard Services shall include, without limitation: (i) maintenance,
repair servicing and adjustment of all Building Systems whether installed by
Master Landlord, Sublandlord, Subtenant or any other occupant of the Premises
(including without limitation HVAC and sprinkler systems and equipment) to the
point(s) of delivery of the Standard Services within the Premises (except
to the extent Master Landlord has expressly conditioned its approval for
installation of any specialized systems or equipment upon the requirement that
Subtenant, or another tenant of the Premises maintain and repair the same): (ii) monitoring
electricity, water, HVAC services and other utilities or services supplied to or
consumed by various occupants of the Premises and the Building as necessary to
identify and account for usage or consumption in excess of reasonable and
customary amounts for standard office use; (iii) re-lamping of Building
standard fluorescent lights and replacement of Building standard lenses; (iv) exterior
window cleaning at regular intervals; (vi) day porter service; and (vii) other
services customarily provided in well managed, comparable first class
multi-tenant office buildings in the South 


 


17

















 


Financial
District leased on a so-called “fully serviced” basis. The reasonable cost of
providing the Standard Services shall be an Operating Cost under the Sublease.


 


8.2
Sublandlord shall only maintain the common areas of the Building that are not
the responsibility of Master Landlord to maintain under the Master Lease to the
standard specified in Section 7.1 of the Master Lease. In no event will
Sublandlord have any obligation to maintain or repair any portion of the
Premises or the Building that Master Landlord is obligated to maintain or
repair. Notwithstanding the forgoing, upon written request by Subtenant,
Sublandlord agrees to use commercially reasonable efforts to enforce any
provision of the Master Lease that requires Master Landlord to make repairs or
perform maintenance to the Building or the Premises.


 


8.3
Subtenant may make Alterations (as defined in Article 6 of the Master
Lease) to the Premises only with Sublandlord’s prior written consent (which
shall not be unreasonably withheld) and then only on the terms and conditions
specified in Article 6 of the Master Lease (“Subtenant Alterations”).
Subtenant may make cosmetic alterations or non-structural alterations, which
cost less than $5,000 without the consent of the Sublandlord, provided that
Subtenant provides Sublandlord and Master Landlord with written notice of such
intended alterations. In those circumstances where Master Landlord’s consent is
required under Article 6 of the Master Lease, it shall be reasonable for
Sublandlord to withhold its consent if Master Landlord does not consent to such
Alterations. To the extent Subtenant seeks access to the vertical and
horizontal raceways in the Building pursuant to Section 9.4 of the Master
Lease, such access shall be subject to Sublandlord’s reasonable access to such
areas is available to Sublandlord and other occupants of the Building. Upon
Subtenant’s written request, Sublandlord shall indicate at the time of its
consent and approval of any alterations in the Premises whether it will require
Subtenant to remove the alterations upon the Expiration Date. Subtenant shall
reimburse Sublandlord for its reasonable out of pocket fees for reviewing and
supervising construction of improvements.


 


9.              CASUALTY
AND EMINENT DOMAIN


 


9.1
In the event of a casualty affecting the Building or the Premises, or of a
taking of all or a part of the Building or the Premises under the power of
eminent domain, Sublandlord will be entitled to exercise any right it may have
to terminate the Master Lease without first obtaining the consent or approval
of Subtenant.


 


9.2
To the extent that the casualty or taking directly affects the Premises, if
Sublandlord obtains from Master Landlord any abatement of rent in connection
with the relevant casualty or condemnation, then Subtenant shall have the
benefit of such abatement of rent (comparable to its then current rental
amount) in the same proportion that the area of the Building affect by such
abatement of rent bears to the area of the Premises, provided Sublandlord shall
not be required to bring any action under the Master Lease to enforce any rent
abatement provisions.


 


9.3
If, in the event of a casualty, the Master Lease imposes on Sublandlord the
obligation to repair or restore leasehold improvements or alterations within
the Master Premises, Subtenant must be responsible for repair or restoration of
leasehold improvements within the Premises, including, but not limited to, the
Subtenant Improvement and any Subtenant Alterations, and the leasehold
improvements existing on the Effective Date. Sublandlord shall not in any event
be responsible for reconstruction of any portion of the Premises that is the
responsibility of Master Landlord under the Master Lease, provided that if
Sublandlord does not terminate the Master Lease, then Sublandlord will use
commercially reasonable efforts to enforce any provision of the Master Lease
that shall require Master Landlord to reconstruct the Building or Premises.


 


18

















 


10.       SURRENDER


 


10.1
On the Expiration Date, or upon the earlier termination of the Sublease or of
Subtenant’s right to possession of the Premises, Subtenant must at once
surrender and deliver up the Premises, together with all improvements thereon,
to Sublandlord in good condition and repair, reasonable wear and tear expected:
conditions existing because of Subtenant’s failure to perform maintenance,
repairs or replacements as required of Subtenant under this Sublease will not
be deemed “reasonable wear and tear.”


 


10.2
Subtenant shall remove any of its personal property and fixtures incident to
Subtenant’s business (“subtenant’s Property”) prior to the Expiration Date or
upon the earlier termination of this Sublease or of Subtenant’s right to
possession. Subtenant shall not be required to remove the improvements
installed as part of Sublandlord Work (except insofar as the same are not
general office improvements or include high density filing systems, computer
mainframes, libraries, telecom nodes, satellite dishes and signs), but shall be
required to remove any Subtenant Alterations it construed or installed pursuant
to Section 8.3 of this Sublease, unless Sublandlord has instructed
Subtenant otherwise, in writing. All Subtenant Alterations and Subtenant
Improvements in or upon the Premises Subtenant is not required to remove will
become a part of and will remain upon the Premises upon the Expiration Date or
earlier termination of this Sublease or of Subtenant’s right to possession
without compensation, allowance or credit to Subtenant. Subtenant shall repair
any damage occasioned by such removal of the Subtenant Alterations, and/or
Subtenant’s Property, which obligation will survive termination of this
Sublease. If Sublandlord or Master Landlord required removal of any Subtenant
Alterations or a portion thereof, and Subtenant does not remove such, or
Subtenant does not remove Subtenant’s Property from the Premises on or before
the Expiration Date or the earlier termination of this Sublease, Sublandlord
may remove the same (and repair any damage occasioned thereby, and dispose
thereof, or at its election, remove and/or store the same. Subtenant shall pay
the costs of such removal, repair and/or storage on demand.


 


10.3
Subtenant will not be required to remove any alterations or improvements made
by Sublandlord prior to the Effective Date. If Sublandlord is required under
the Master Lease to remove any such alterations or improvements, Subtenant must
permit Sublandlord to enter the Premises for a reasonable period of time prior
to the Expiration Date, for the purpose of removing such alterations and
improvements and restoring the Premises as required by the Master Lease.


 


11.       HOLDING OVER


 


11.1
Subtenant has no right to occupy the Premises or any portion thereof after the
expiration of the Term or earlier termination of this Sublease.


 


11.2
In the event Subtenant or any party claiming by, through or under Subtenant
holds over, Sublandlord may exercise any and all remedies available to it at
law or in equity to recover possession of the Premises, and to recover damages,
including without limitation, all damages payable by Sublandlord to Master
Landlord by reason of such holdover. Without limiting the damages recoverable
under the foregoing sentence, for each and every month or partial month that
Subtenant or any party claiming by, through or under Subtenant remains in
occupancy of all or any portion of the Premises after the expiration of the
Term or earlier termination of this Sublease, Subtenant must pay, a holdover
rent of 150% of the then existing Base Rent for the first two (2) months
of holdover. Beyond the initial two (2) month period, Subtenant’s holdover
rent shall increase to 200% of its then Base Rent for the Premises as minimum
damages and not as a penalty. The acceptance by Sublandlord of any lesser sum
will be construed as payment on account and not in satisfaction of damages for
such holding over.


 


19

















 


12. DEFAULT


 


12.1
Any one or more of the following events will be considered a “Default” by
Subtenant:


 


12.1.1
Subtenant fails to make any payment of Rent as and when the same is due, and
such default shall continue for five (5) business days after notice of
such default is given to Subtenant, except that if Sublandlord shall have given
two (2) such notices of default in the payment of any Rent in any 12-month
period, Subtenant shall not be entitled to any further notice of its
delinquency in the payment of any Rent or an extended period in which to make
payment until such time as 12 consecutive months shall have elapsed without
Subtenant having failed to make any such payment when due, and the occurrence
of any default in the payment of any Rent within such 12-month period after the
giving of two (2) such notices shall constitute an Event of Default;


 


12.1.2
The occurrence or existence of any act or omission by Subtenant which is
described as a Default elsewhere in this Lease.


 


12.1.3
Subtenant, by its act or omission, causes an event or condition that is an
Event of Default under the Master Lease, or would be an Event of Default under
the Master Lease, subject only to the delivery of any required notice or
passage of any cure or grace period, and such event or condition is not cured
within a period equal to two thirds the cure or grace period provided in the
Master Lease for Sublandlord to cure such default.


 


12.1.4
Subtenant fails to fulfill, keep, observe, or perform any of the other
covenants and obligations herein contained to be fulfilled, kept, observed and
performed by Subtenant, and such failure continues for more than five business (5) days
after notice thereof in writing to Subtenant, provided however, if such failure
cannot be cured within five business (5) days, then provided that Subtenant
as commenced to cure such failure and diligently pursues a cure of such
failure, Subtenant shall have such reasonable time, not to exceed thirty (30)
days to cure such failure.


 


12.1.5
Subtenant or any Guarantor: (a) ceases doing business as a going concern: (b) makes
an assignment for the benefit of creditors: (c) makes a transfer in fraud
of creditors: (d) admits in writing its inability to pay its debts when
due: (e) is adjudicated as insolvent: (f) files a petition (or files
an answer admitting the material allegations of a petition) under any stat or
federal bankruptcy or other Laws affection creditors’ rights: (g) fails,
within sixty (60) days after the commencement of proceedings for relief under
any state or federal bankruptcy or other Laws affecting creditors’ rights, to
have such proceedings dismissed; (h) has all or substantially all of its
assets subject to judicial seizure or attachment and such seizure or attachment
is not released within sixty (60) days; (i) consents to or acquiesces in
the appointment of a trustee, receiver or liquidator of all or any substantial
part of its assets; or (j) falls within sixty (60) days after the
appointment of such a trustee, receiver or liquidator to have such appointment
vacated (each, an “Insolvency Proceeding”).


 


12.1.6
Subtenant’s leasehold estate under this Sublease is taken by process or
operation of Law.


 


12.2
Upon the occurrence of any one or more Default(s) by Subtenant,
Sublandlord shall have all the remedies specified in Section 15.2 of the
Master Lease, including, without limitation, the remedies prescribed in Section 1951.4
of the Civil Code of California, as set forth in the Master Lease.


 


12.3
Any notice delivered by Sublandlord in connection with, or as a precondition
to, a Default by Subtenant will be in lieu of and not in addition to any notice
to pay rent or notice to perform covenant required under law.


 


13.       PROVISIONS REGARDING MASTER LEASE


 


Incorporation. The following provisions of the Master
Lease are incorporated by reference into this Sublease so that all obligations
of Sublandlord, as “tenant” thereunder, shall be obligations of Subtenant
hereunder, except as expressly otherwise provided by this Sublease, and then
only as applicable to the Premises:


 


20
















 


Articles and Sections 5.1 (as modified by the Fourth Amendment), 5.3,
7.1, 7.3, 8, 9.1 (as modified by the Fourth Amendment), 9.2, 9.4, 10, 11.1,
11.3, 12, 13, 14.2, 14.4, 14.6, 14.7, 14.8, 15.2, 16.1 16.2, 17, 18 (as
modified by the Fourth Amendment), 19.1, 20, 21.1, 23, 26, 27, 29.2, 33, 35,
and 38 of the Master Lease;


 


Articles and Sections 1(d), 1(e), and 6 of the Addition Provisions
Rider attached as Exhibit “E” to the Master Lease; and


 


Exhibits “B” and “D” to the Mater Lease.


 


Limitations. The following limitations shall apply to the
interpretation and enforcement of provisions of the Master Lease which are
incorporated in this Sublease under Section 13.1 above:


 


Any non-liability, release, indemnity or hold harmless provision, and
any provisions pertaining to the waiver or subrogation rights and or the naming
of a party under and insurance policy, in the Master Lease for the benefit of
Master Landlord which are expressly incorporated herein by reference, shall be
deemed to inure to the benefit of Master Landlord and Sublandlord for the
purpose of this Sublease.


 


Any right of the Master Landlord for access or inspection under the
Master Lease and any right of the Master Landlord to do work in the Premises or
in the Building or in, on or under the Common Areas under the Master Lease, and
any right of the Master Landlord in respect of rules and regulations under
the Master Lease, shall be deemed to inure to the benefit of both the Master
Landlord and Sublandlord.


 


If any of the express provisions of this Sublease shall conflict with
any of the provisions of the Master Lease incorporated by reference, such
conflict shall be resolved in every instance in favor of the express provisions
of this Sublease. If any incorporated provision of the Master Lease cross-references
a provision of the Master Lease which is not incorporated in this Sublease,
such cross-referenced Master Lease provision shall be disregarded except to the
extent required for a fair and equitable interpretation of the incorporated
Master Lease provision.


 


Any obligation of Sublandlord which is contained in this Sublease by
the incorporation by reference of the provisions of the Master Lease shall be
observed or performed by Sublandlord using commercially reasonable efforts to
cause Master Landlord under the Master Lease to observe and/or perform the
same, and Sublandlord shall have a reasonable time to do so after written
notice from Subtenant specifying with reasonable particularly the deficiency in
Sublandlord’s performance under this Sublease.


 


With respect to any approval or consent required to be obtained from
Sublandlord under the Master Lease, such approval or consent must be obtained
from both Master Landlord and Sublandlord. Any approval or consent required of
Sublandlord conclusively shall be deemed reasonably withheld if approval or
consent also is required of the Master Landlord, and Master Landlord withholds
Master Landlord’s approval or consent after commercially reasonable efforts by
Sublandlord to obtain same from Master Landlord.


 


Assumption. Subtenant shall assume and perform for the benefit
of Sublandlord and Master Landlord each and all of the conditions, covenants
and obligations to be performed by Sublandlord as Subtenant under the Master
Lease to the extent said terms, covenants, conditions and obligations are
incorporated in this Sublease, are not modified or limited hereby and are
applicable to the Premises demised hereby. Subtenant shall not commit or permit
to be committed on the Premises any act or omission which would constitute a
breach of any of the terms, covenants, conditions and obligations of
Sublandlord under the Master Lease.


 


Subtenant’s Indemnity for Breach of Master Lease. Subtenant
shall indemnify and save Sublandlord harmless against any loss, damage or injury,
including, without limitation, reasonable attorneys’ fees, and/or any amounts
assessed against Sublandlord by Master Landlord under the Master Lease on
account of any Default by Subtenant that shall give rise to an actual or
potential Event of Default under the Master Lease, which Sublandlord may suffer
or incur under the Master Lease as the result of Subtenant’s failure to
observe, perform or otherwise discharge its obligations under this Sublease,
including, without limitation, any 


 


21

















 


provisions
of the Master Lease that are incorporated herein. Subtenant’s obligations in
this Section 13.4 shall survive the Expiration Date or earlier termination
of this Sublease. Notwithstanding any other provision of this Sublease to the
contrary, in the even of any failure of Subtenant to observe, perform or
otherwise discharge its obligations under this Sublease (and after any notice
and opportunity to cure as may be required under this Sublease) that may cause
an Event of Default to occur under the Master Lease, Sublandlord may, in
addition to all other remedies granted to Sublandlord under this Sublease, take
such action as may reasonably be required to prevent such matter from maturing
into an Event of Default under the Master Lease. Subtenant shall pay all
expenses reasonably incurred by Sublandlord in connection therewith (together
with interest thereon at the Interest Rate from the date of expenditure) within
thirty (30) days after demand by Sublandlord.


 


Subtenant recognizes that Sublandlord is not in a position to render
any of the services or to perform any of the obligations required of Master
Landlord by the terms of the Master Lease. Therefore, despite anything to the
contrary in this Sublease, Subtenant agrees that performance by Sublandlord of
its obligations under this Sublease is condition on performance by the Master
Landlord of its corresponding obligations under the Master Lease, and
Sublandlord will not be liable to Subtenant for any default of the Master
Landlord under the Master Lease. Subtenant will not have any claim against
Sublandlord based on the Master Landlord’s failure or refusal to comply with
any of the provisions of the Master Lease unless that failure or refusal is a
result of Sublandlord’s act or failure to act. Despite the Master Landlord’s
failure or refusal to comply with any of those provision of the Master Lease,
this Sublease will remain in full force and effect and Subtenant will pay the
Base Rent and Additional Rent and all other charges provided for in this
Sublease without any abatement, deduction or setoff. In the event of a failure
or refusal by Master Landlord to comply with any provisions of the Master
Lease, Sublandlord’s obligation hereunder shall be limited to using commercially
reasonable efforts to enforce the Master Lease within a reasonable time after
Subtenant provides notice to Sublandlord of Master Landlord’s failure or
refusal.


 


Subtenant shall indemnify and save Sublandlord harmless against any
loss, damage or injury, including, without limitation, reasonable attorneys’
fees, and/or any amounts assessed against Sublandlord by Master Landlord under
the Master Lease on account of any Default by Subtenant that gives rise to a
default or potential default under the Master Lease, which Sublandlord may
suffer or incur under the Master Lease as the result of any breach by Subtenant
of its obligations under this Sublease, including, without limitation, any
provision of the Master Lease that are incorporated herein (except for the
Excluded Provisions). Subtenant’s obligations hereunder shall survive
termination of this sublease. Notwithstanding any other provision of this
Sublease to the contrary, in the event of a breach of this Sublease that may
cause an event of default to occur under the Master Lease, Sublandlord may, in
addition to all other remedies granted to Sublandlord hereunder, at Subtenant’s
expense and after notice to Subtenant, take such action as may reasonably
required to prevent such Default by Subtenant form maturing into an incurable
event of default under the Master Lease, and Subtenant shall pay expenses
directly incurred by Sublandlord as a result of such action within ten (10) days
after written demand by Sublandlord.


 


14.       MASTER LANDLORD’S CONSENT


 


This Sublease and the obligations of the parties hereunder are
expressly conditioned upon Sublandlord’s obtaining prior written consent hereto
by Master Landlord, Subtenant must promptly deliver to Sublandlord any
information reasonably requested by Master Landlord (in connection with Master
Landlord’s approval of this Sublease) with respect to the nature and operation
of Subtenant’s business and/or the financial condition of Subtenant.


 


Sublandlord and Subtenant hereby agree, for the benefit of Master
Landlord, that this Sublease will not (a) create privity of contract
between Master Landlord and Subtenant; (b) be deemed to have amended the
Master Lease in any regard (unless Master Landlord will have 


 


22

















 


expressly
agreed in writing to such amendment); or (c) be construed as a waiver of
Master Landlord’s right to consent to any assignment of the Master Lease by
Sublandlord or any further subletting of the Master Premises, or as a waiver of
Master Landlord’s right to consent to any assignment by Subtenant of this
Sublease or any sub-subletting of the Premises or any part thereof.


 


Sublandlord and Subtenant agree, for the benefit of Master Landlord,
that Master Landlord shall not bear responsibility for any delay in commencement
of this Sublease term.


 


If Master Landlord fails to consent to this Sublease within twenty (20)
days after the Effective Date, either party shall have the right to terminate
this Sublease by giving written notice thereof to the other at any time
thereafter.


 


15. NOTICES


 


15.1
All notices which may or are required to be given by either party to the other
must be in writing to the addresses specified in the Basic Sublease Provisions,
or at such place as a party may from time to time designate by notice in
writing. Notices will be deemed delivered (a) when receive or refused if
personally delivered; (b) four business days after being sent if sent by
United States registered or certified mail, postage prepaid, return receipt
requested; or (c) two business days after being sent by a nationally
recognized overnight commercial courier services providing receipted delivery.


 


15.2
Subtenant agrees promptly to deliver to Sublandlord a copy of any notice,
demand, request, consent or approval related to the Premises and received from
Master Landlord or any governmental agency.


 


16.       SECURITY DEPOSIT


 


Concurrently with Subtenant’s execution of this Sublease, Subtenant
shall deposit with the Sublandlord the Security Deposit in the amount set forth
in the Basic Sublease Provisions. The Security Deposit shall be held by
Sublandlord without liability for interest (unless required by law).
Sublandlord shall not be required to keep the Security Deposit separate from
its other accounts.


 


Sublandlord shall hold the Security Deposit as security for the
performance of Subtenant’s obligations under this Sublease. The Security
Deposit is not an advance payment of Rent or a measure of Subtenant’s liability
for damages.


 


Subtenant shall have no right to call upon Sublandlord to apply all or
any part of the Security Deposit to cure any default or fulfill any obligation
of Subtenant, but such use shall be solely in the discretion of Sublandlord.


 


Subtenant waives the provisions of all provisions of law now in force
of that became in force after the Effective Date of this Sublease (including,
without limitation, California Civil Code Section 1950.7) that provide
that Sublandlord may claim from a security deposit only those sums reasonably
necessary to remedy defaults in the payment of Rent, to repair damage caused by
Subtenant, or to clean the Premises. Subtenant aggress that Sublandlord may, in
addition, claim those sums reasonably necessary to compensate Sublandlord for
any other foreseeable or unforeseeable loss or damage caused by the act or
omission of Subtenant or Subtenant’s officers, agents, employees, independent
contractors, or invitees.


 


In the event of a Default, Sublandlord may, from time to time, without
prejudice to any other remedy, use all or a portion of the Security Deposit to
satisfy past due Rent or to cure any uncured Default by Subtenant, or in
Sublandlord’s discretion apply such Security Deposit after a Default, to (a) pay
any Rent or other sum in default; (b) pay any amount that Sublandlord may
spend or become obligated to spend in exercising Sublandlord’s rights under Article 12;
or (c) compensate Sublandlord for any expense, loss or damage that
Sublandlord may suffer because of Subtenant’s Default. In the even that
Sublandlord applies any portion of the Security Deposit as permitted in this
Section; Subtenant shall restore the Security Deposit to its original amount
within five (5) days for Sublandlord’s demand. Sublandlord shall notify
Subtenant in writing of 


 


23

















 


any
defaults, including any damages whereby it intends to subtract the cost from
the Security Deposit.


 


Sublandlord shall return any unapplied portion of the Security Deposit
to Subtenant within forty-five (45) days after the last to occur of: (i) the
determination of Subtenant’s Share of any Operating Costs and Taxes for the
final year or portion of a year of the Term; (ii) the date Subtenant
surrenders possession of the Premises to Sublandlord in accordance with this
Sublease, or (iii) the Expiration Date, unless there is a Default by
Subtenant in existence on such date.


 


If Sublandlord conveys Sublandlord’s interests under this Sublease, the
Security Deposit may be assigned or negotiated by Sublandlord to Sublandlord’s
grantee, and if so assigned or negotiated, provided Sublandlord gives Subtenant
notice of the name of such grantee, Subtenant aggress to look solely to such
grantee for the proper application of the security Deposit in accordance with
the terms of this Section and the return thereof in accordance herewith.
Upon delivery of such notice, Subtenant hereby releases the Sublandlord named
herein of any and all liability with respect to the Security Deposit, the
application of any proceeds thereform and its return, and Subtenant agrees to
look solely to such grantee. This provision shall also apply to subsequent
grantees. Neither the holder of a mortgage nor the Master Landlord shall be
responsible to Subtenant for the return or application of the Security Deposit,
whether or not it succeeds to the position of Sublandlord hereunder, unless the
Security Deposit shall have been actually received by such mortgage holder or
Master Landlord.


 


17.         OPTION TO RENEW. Provided the
Sublease is in full force and effect, Subtenant is not in default under any of
the other terms and conditions of the Sublease at the time of notification or
commencement, and this Sublease has not been assigned, Subtenant shall have an
option to renew (“Renewal Option”) this Sublease for a term for the period
commencing on the date following the Expiration Date under Section 1.8
above and continuing until April 14, 2018. (“Renewal Term”), on the same
terms and conditions set forth in this Sublease, except as modified by the
terms, covenants and conditions as set forth below:


 


If Subtenant elects to exercise the Renewal Option, then Subtenant
shall provide Sublandlord with written notice no earlier than the date which is
eighteen (18) months prior to the Expiration Date under Section 1.8 above,
and no later than the date which is twelve (12) months before such Expiration
Date. If Sublandlord fails to provide such notice, Subtenant shall have no
further or additional right to extend or renew the Term of this Sublease.


 


The annual Base Rent and Monthly Base Rent in effect at the expiration
of the then current Term of this Sublease shall be adjusted to reflect the
Prevailing Market (defined below) rate as of the date the applicable Renewal
Term is to commence, taking into account the specific provisions of this
Sublease which will remain constant. Sublandlord shall advise Subtenant of the
new Annual Base Rent and Monthly Base Rent for the Premises thirty (30) days
after receipt or Subtenant’s written notice of exercise of the Renewal Option.
Unless Subtenant notifies Sublandlord of its objection to Sublandlord’s
determination of the Prevailing Market Rate within thirty (30) days after
receipt thereof, the same shall be the Annual Base Rent and Monthly Base Rent
for the Renewal Term. If Subtenant makes timely objection to Sublandlord’s
determination of the Prevailing Market Rate, the parties shall negotiate in
good faith the Prevailing Market Rate. However, if the parties have not reached
agreement on the Prevailing Market Rate within ninety (90) days after exercise
of the Renewal Option, Subtenant, by written notice to Sublandlord (the “Arbitration
Notice”) shall have the right to have the Prevailing Market Rate for the
Premises within the ninety day (90) period described and Subtenant fails to
timely exercise its right to arbitrate, Subtenant’s Renewal Option shall be
deemed to be null and void and of no further force and effect. In no event
shall the Annual Base Rent and Monthly Base Rent for the applicable Renewal
Term be less than the Annual Base Rent and Monthly Base Rent in the preceding period.


 


24

















 


17.2.1
If Subtenant provides Sublandlord with an Arbitration Notice, Sublandlord and
Subtenant, within five (5) days after the date of the Arbitration Notice,
shall each simultaneously submit to the other, in a sealed envelope, its good
faith estimate of the Prevailing Market rate for the Premises during the
Renewal Term (collectively refereed to as the “Estimates”). If the higher of
such Estimates is not more than 105% of the lower of such Estimates, then
prevailing Market rate shall be the average of the two Estimates. If the
Prevailing Market rate is not resolved by the exchange of Estimates, then,
within seven (7) days after the exchange of Estimates, Sublandlord and
Subtenants shall each select an appraiser to determine which of the two
Estimates most closely reflects the Prevailing Market rate for the Premises
during the Renewal Term. Each appraiser so selected shall be certified as an
MAI appraiser of as an ASA appraiser and shall have had at least five (5) years
experience within the previous ten (10) years as a real estate appraiser
working in San Francisco, California, with working knowledge of current rental
rates and practices. For purposes hereof, an “MAI” appraiser means an
individual who holds a MAI designation conferred by, and its an independent
member of, the American Institute of Real Estate Appraisers (or its successor
organization, or in the event there is no successor organization, the
organization and designation most similar), and an “ASA” appraiser means an
individual who holds the Senior Member designation conferred by, and is in
independent member of, the American Society of Appraisers (or its successor
organization, or, in the event there is no successor organization, the organization
and designation most similar).


 


17.2.2
Upon selection, Sublandlord’s and Subtenant’s appraisers shall work together in
good faith to agree upon which of the two Estimates most closely reflects the
Prevailing Market rate for the Premises. The Estimate chosen by such appraisers
shall be binding on both Sublandlord and Subtenant as the Base Rent rate for
the Premises during the Renewal Term. If either Sublandlord or Subtenant fails
to appoint an appraiser within the seven (7) day period referred to above,
the appraiser appointed by the other party shall be the sole appraiser for the
purposes hereof. If the two appraisers cannot agree upon which of the two
Estimates most closely reflects the Prevailing Market within twenty (20) days
after their appointment, then, within ten (10) days after the expiration
of such twenty (20) day period, the two appraisers shall select a third
appraiser meeting the aforementioned criteria. Once the third appraiser (i.e.
arbitrator) as been selected as provided for above, then, as soon thereafter as
practicable but in any case within fourteen (14) days, the arbitrator shall
make his determination of which of the two Estimates most closely reflects the
Prevailing Market rate and such Estimate shall be binding on by Sublandlord and
Subtenant as the Base Rent rate for the Premises. If the arbitrator believes
that expert advice would materially assist him, he may retain one or more
qualified persons to provide such expert advice. The parties shall share
equally in the costs of the arbitrator and of any experts retained by the
arbitrator. Any fees of any appraiser, counsel or experts engaged directly by
Sublandlord or Subtenant, however, shall be home by the party retaining such
appraiser, counsel or expert.


 


17.2.3
If the Prevailing Market rate has not been determined by the commencement date
of the renewal Term, Subtenant shall pay Base Rent upon the terms and
conditions in effect during the last month of the initial Term for the Premises
until such time as the Prevailing Market rate has been determined. Upon such
determination, the Base Rent for the Premises shall be retroactively adjusted
to the commencement of the Renewal Term for the Premise. If such adjustment
results in an underpayment of Base Rent by Subtenant, Subtenant 


 


25

















 


shall
pay Sublandlord the amount of such underpayment within thirty (30) days after
the determination thereof. If such adjustment results in an overpayment of Base
Rent by Subtenant, Sublandlord shall credit such overpayment against the next
installment of Base Rent due under the Sublease and, to the extent necessary,
any subsequent installments, until the entire amount of such overpayment has
been credited against Base Rent.


 


17.3
The Renewal Option is not transferable; the parties hereto acknowledge and
agree that they intend that the Renewal Option shall be “personal” to Subtenant
as set forth above and that in no event will any assignee or sublease have any
right to exercise the aforesaid options to renew.


 


17.4
If Subtenant fails to validly exercise the Renewal Option, Subtenant shall have
no further right extend the term of this Sublease.


 


17.5
For purposes of this Section, “Prevailing Market” shall mean the arms length
fair market annual rental rate per rentable square foot under comparable
transactions entered into on or about the date on which the Prevailing Market
rate is being determined hereunder for space comparable to the Premises in the
Building and comparable buildings, taking into account all then-relevant
factors. The determination of the Prevailing Market rate shall take into
account any material economic differences between the terms of this Sublease
and any comparable transactions, such as rent abatements, construction costs,
the value of replicating existing improvements and other concessions and the
manner. If any, in which the Sublandlord under any such Sublease is reimbursed
for operating expenses and taxes and shall further take into account all other
then-relevant factors.


 


18.       MISCELLANEOUS


 


18.1
Subtenant shall be entitled to signage (a) in the main lobby and (b) in
the fourth floor elevator lobby. The location, quality, design, style, lighting
and size of such signage shall be consistent with the Building’s standard
signage program and shall be subject to Sublandlord’s prior written approval,
which shall not be unreasonably withheld, conditioned or delayed. Provided
Sublandlord installs a lobby directory (although such installation shall not be
a condition to the Commencement Date of this Sublease), Subtenant shall be
entitled to one (1) line on such lobby directory to display the Subtenant’s
name and location in the Building. Subtenant shall not have the right to erect
an exterior sign. Sublandlord shall be responsible for all costs associated
with signage. Subtenant may not erect signage that is visible from outside the
Building, unless it obtains the prior written consent of Sublandlord and Master
Landlord, which consent may be withheld in its or their sole discretion.


 


18.2
Subtenant, upon seventy-two (72) hours advance notice to Sublandlord, shall
have the right to receive supplemental HVAC service during hours other than
Building Hours. Subtenants shall pay Sublandlord the standard charge for such
supplemental HVAC service as reasonably determined by Master Landlord from time
to time, which shall be reasonably related to Sublandlord’s cost to provide any
such service and reasonably competitive with the amounts charged by landlords
of Comparable Building for such services. Subtenant may request same-day “fans
only” service from the Building Manger, which shall be charged at the
prevailing rate for such service.


 


18.3
Sublandlord at its sole expense, on at least ninety (90) days prior written
notice, may require Subtenant to move from the Premises to other space of
comparable size and décor in the Building (the “Substitute Premises”). The
Substitute Premises must substantially contain similar finishes as the Premises
and be in substantially the same condition as the Premises are required to be
under the term of this Sublease, be approximately the same rentable square
footage as the Premise, and not less than be contained all on one (1) floor
of the 


 


26

















 


Building,
and have substantially the same number and type of work stations, offices,
break rooms and reception areas, labs, servers, telephone rooms and conference
rooms as are contained in the Premises as of the date Subtenant receives
Sublandlord’s notice of relocation. In the event of any such relocation,
Sublandlord will pay all expenses of preparing and decorating the Substitute
Premises so that they will be substantially similar to the Premises from which
Subtenant is moving, and Sublandlord will also pay the expense of moving Subtenant’s
furniture and equipment to the Substitute Premises. Sublandlord also shall pay
Subtenant’s other reasonable costs of relocation to the Substitute Premises,
including the cost of printing and distributing change of address notices to
Subtenant’s customers and one month’s supply of stationary showing the new
suite number of the Substitute Premises, the removal of all existing IT and
telephone wiring in the Premises and the installation of all new IT and
telephone wiring in the new premises. Sublandlord may not relocate Subtenant
within 18-months of the expiration of this Sublease. In the event Sublandlord
must relocate Subtenant within 18-months of Sublease expiration, Subtenant
shall have the right to terminate this Sublease at no penalty or cost to Subtenant.


 


18.4
Each party warrants to the other that it has had no dealings with any broker or
agent in connection with this Sublease, except the Brokers specified in the
Basic Sublease Provisions and whose commissions shall be payable by separate
agreement. Each party covenants to protect, defend, indemnify and hold harmless
the other party from and against any and all costs (including reasonable
attorneys’ fees), expense or liability for any compensation, commission and
charges claimed by any broker or other agent, other than the Brokers, with
respect to this Sublease or the negotiation thereof on behalf of such party.


 


IN
GRAFTON PARTNERS L.P v. SUPERIOR COURT, 36 CAL. 4TH 944
(2005), THE CALIFORNIA SUPREME COURT RULED THAT CONTRACTUAL, PRE-DISPUTE JURY
TRAIL WAIVERS ARE UNENFORCABLE. THE PARTIES, HOWEVER, ANTICIPATE THAT THE
CALIFORNIA LEGISUATURE WILL ENACT LEGISLATION TO PERMIT SUCH WAIVERS IN CERTAIN
CASES. IN ANTICIPATION OF SUCH LEGISLATION, SUBLANDLORD AND SUBTENANT HEREBY
WAIVE, AS OF THE EFFECTIVE DATE OF SUCH LEGISLATION AND TO THE EXTENT PERMITTED
BY APPLICABLE LAW, TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS
IN RESPECT OF ANY MATTER ARAISING OUT OF OR IN CONNECTION WITH, EITHER DIRECTLY
OR INDIRECTLY, THIS SUBLEASE, OR THE SUBJECT MATTER HEREOF, SUBTENANTS USE OR
OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE.


 


18.5
This Sublease and the rights and obligations of the parties shall be interpreted,
construed and enforced in accordance with the laws of the state in which the
Premises are located, and Sublandlord and Subtenant hereby irrevocably consent
to the jurisdiction and proper venue of such state.


 


18.6
The expiration of the Term, whether by lapse of time or otherwise, shall not
relive either party of any obligations under this Sublease which accrued prior
to or which may continue to accrue after the expiration or early termination of
this Sublease. Without limited the scope of the prior sentence, it is agreed
that Subtenant’s obligations under any provision of this Sublease, or the terms
of the Master Lease which are expressly incorporated into this Sublease, that
is expressly provided by its terms to survive termination of this Sublease shall
survive the expiration or early termination of this Sublease.


 


18.7
If any term or provision of this Sublease shall to any extent be invalid or
unenforceable, the remainder of this Sublease shall not be affected, and each
provision of this Sublease shall be valid and enforced to the fullest extent
permitted by law.


 


27

















 


18.8
The headings and titles to the Articles and Sections of this Sublease are for
convenience only and shall have no effect on the interpretation of any part of
the Sublease.


 


18.9
All understandings and agreements previously made between the parties are
superseded by this Sublease, and neither party is relying upon any warranty,
statement or representation not contained in this Sublease. This Sublease may
be modified only by a written agreement signed by Sublandlord and Subtenant.


 


18.10
Each party represents and warrants to the other that the person or persons
executing this Sublease for the representing party are fully authorized to so
act and no other action is required to bind Sublandlord to this Sublease and
that the representing party has the right and power to execute and deliver this
Sublease and to perform its obligations hereunder, subject only to Master
Landlord’s consent, and that the representing party is duly organized and in
good standing in its state of formation and is authorized to conduct business
in the state where the Premises are located.


 


[Remainder of page intentionally blank.]


 


28

















 


In
witness whereof, Sublandlord and Subtenant have executed this Sublease on the
dates set forth below, intending to be bound hereby as of the Effective Date.


 


 


	
  SUBLANDLORD:

  	
   

  	
  SUBTENANT:

  
	
   

  	
   

  	
   

  
	
  SUN MICROSYSTEMS, INC.,

  	
   

  	
  PROSODIE INTERACTIVE,CALIFORNIA

  
	
  a
  Delaware corporation

  	
   

  	
  a
  Delaware Corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /S/
  Charles Barry

  	
   

  	
  By:

  	
  /S/
   Nicolas Dourassoff

  
	
  Its:
  Senior Director

  	
   

  	
  Its:
  CEO

  
	
  Date:
  11/7/2006

  	
   

  	
  Date:
  10/3/06

  
					



 


29

















 


EXHIBIT C


 


LEASE AGREEMENT


 


between


 


K3 FIRST STREET ASSOCIATES, LLC


 


as “Landlord”


 


and


 


SUN MICROSYSTEMS, INC.


 


as “Tenant”


 


30
















 


THIS
LEASE AGREEMENT (this “Lease”) is made as of the Lease Date set forth in the
Basic Lease Information, by and between the Landlord identified in the Basic
Lease Information (“Landlord”), and the Tenant identified in the Basic Lease
Information (“Tenant”), Landlord and Tenant hereby agree as follows:


 


1.               PREMISES


 


Grant Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, upon the terms and subject to the conditions of this
Lease, the office space identified in the Basic Lease Information as the
Premises (the “Premises”), in the Building located at the address specified in
the Basic Lease Information (the “Building”). 
The approximate configuration and location of the Premises is shown on Exhibit A.
Landlord and Tenant agrees that the rentable area of the Premises for all
purposes under this Lease shall be the Rentable Area specified in the Basic
Lease Information, subject to modification per Paragraph 1.2 below.  The Building, together with the parking
facilities serving the Building (the “Parking Facility”), and the parcel(s) of
land on which the Building and the Parking Facility are situated (collectively,
the “Property”), is part of the Project identified in the Basic Lease
Information (the “Project”).


 


Rentable Square Footage of Premises, Building and Project


 


(a)          Landlord and Tenant agree
that, except as modified per this Section 1.2 the rentable area of the
Premises and of the Building for all purposes under this Lease shall be the
rentable square footage specified in the Basic Lease Information.  Upon the completion of all of the buildings
comprising the Project, Landlord shall notify Tenant of the rentable square
footage of the Project for purposes of calculating the Building’s Allocable
Share.  Upon completion of the Building Shell
(as that term is defined in Exhibit F) for the Building, Landlord’s base
building architect (the “Architect”) shall measure both the Premises within the
Building, the Building and the Project using the “Standard Measure for
Measuring Floor Area in Office Buildings” published by the Secretarial Building
Owners and Managers Association International (ANSI/BOMA Z65.1-1996), approved June 7,
1996 (the “BOMA Standard”).


 


(b)         Landlord shall promptly
notify Tenant of the Architect’s determination of the rentable square footage
of the Premises, the Building and the Project. 
Tenant reserves the right to have its space planner or architect measure
the Premises, the Building and the Project to confirm that the measurements provided
by the Architect are accurate and conform to the BOMA Standard.  Any discrepancy between the measurements
obtained by the Architect and the measurements obtained by the Tenant with
respect to the Premises within the Building and the Building shall be promptly
resolved by the parties through good faith negotiation in accordance with BOMA
Standards.


 


Landlord Warranties.  Landlord warrants that on the delivery date
for the Premises (i) the Premises (solely to the extent constructed by
Landlord), the Building, the Land and the Project shall comply with all laws,
codes, ordinances, and other governmental requirements (including, but not
limited to, zoning ordinances and the Americans with Disabilities Act) then
applicable to the use, construction, condition and occupancy of the Premises,
the Building, the Land and the Project, and (ii) the Premises (solely to
the extent constructed by Landlord), the Building and the Project, including
the improvements and equipment therein, and the Common Areas shall be in good
working order, condition, and repair, with each floor free and clear of debris.


 


31

















 


Landlord Maintenance Warranty If Landlord is responsible
for the construction of the Tenant Improvements pursuant to the Work Leuer
Agreement, Landlord shall obtain customary warranties and guaranties from the
contractor or contractors performing such work and/or the manufacturers of
equipment installed therein.  If Tenant
makes repairs to any component of the Premises or any of its systems not
covered by the Landlord’s warranty contained in this Section 1.4 but for
which Landlord has obtained a contractor’s or manufacturer’s warranty, then
Landlord shall, upon request by Tenant, use its good faith efforts to pursue
its rights under any such warranties for the benefit of Tenant.


 


2.               TERM POSSESSION


 


2.1
The term of this Lease (the “Term”) shall commence on the Commencement Date as
described below and, unless sooner terminated, shall expire on the Expiration
Date set forth in the Basic Lease Information (The “Expiration Date”).  The “Commencement Date” shall be the Rent
Commencement Date (as that term is defined below) with respect to the last
floor of the Premises delivered by Landlord to Tenant.  The parties anticipate that the Commencement
Date will occur on or about February 8, 2003 (the “Scheduled Commencement
Date”); provided, however, that Landlord shall not be liable for any claims,
damages or liabilities if the Premises are not ready for occupancy by the
Scheduled Commencement Date. If the Premises are not delivered by the Landlord
to Tenant, with all of Landlord’s Work substantially complete by May 8,
2003 (“Outside Substantial Completion Date”), subject to the force majeure (not
to exceed 180 days) or any Tenant Delay (as that term is hereinafter defined).  Tenant shall have the right to terminate this
Lease giving Landlord written notice at any time after the Substantial
Completion Deadline and prior to substantial completion of Landlord’s Work, in
which case this Lease will be terminated. 
Landlord and Tenant acknowledge and agree that Landlord shall deliver to
Tenant the Premises in increments of two (2) floors every 30-45 days in
the condition required by Exhibit F attached hereto.  Notwithstanding anything to the contrary
contained herein, all of the terms and conditions of this Lease shall apply to
the floors of the Premises delivered to Tenant prior to Commencement Date; and
the rent commencement date (the “Rent Commencement Date”) with respect to each
floor delivered to Tenant shall be the earlier of (a) one hundred twenty
(120) days after the date on which Landlord tenders possession of such floor of
the Premises to Tenant with Landlord’s Work therein Substantially Complete or
the date such floor would have been Substantially Complete but for Tenant
Delays, or (b) the date upon which Tenant, with Landlord’s written
permission, actually occupies and conducts business on such floor(s) of
the Premises. Tenant shall pay to Landlord Base Rent and Additional Rent with
respect to any such floor(s) of the Premises commencing on the Rent
Commencement Date with respect to such floor(s) of the Premises. Landlord
and Tenant acknowledge and agree that certain rent and other obligations may
commence earlier than the Commencement Date, on a phased basis, as floors
within the Premises are delivered to Tenant, all as provided above.  However, for purposes of determining the Term
and the first and subsequent lease years, there shall be a single Commencement
Date, determined as provided above, with respect to the Building. Promptly
after the Rent Commencement Date with respect to each floor is ascertained,
Landlord and Tenant shall execute, in recordable form, a written declaration
setting forth the Rent Commencement Date for such floor.  Promptly after the Commencement Date with
respect to this Lease, Landlord and Tenant shall confirm such Commencement Date
in writing in the form of the Commencement Date Agreement attached hereto as Exhibit C.
“Tenant Delay” means any act or omission of Tenant or its agents, employees,
vendors or contractors that actually delays the Substantial Completion of the
Landlord Work, including, without limitation: (1) Tenant’s failure to
furnish information or approvals within 


 


32

















 


any
time period specified in this Lease, including the failure to prepare or
approve preliminary or final plans by any applicable due date; (2) informed
by Landlord that the selection may result in a delay; (3) changes
requested or made by Tenant to previously approved plans and specifications,
including Additional Shell Construction Items; (4) performance of work in
the Premises by Tenant of Tenant’s contractor(s) during the performance of
the Landlord Work after reasonable notice from Landlords that such work is interfering
with the progress of Landlord Work; or (5) if the performance of any
portion of the Landlord Work depends on the prior or simultaneous performance
of work by Tenant, a delay by Tenant or Tenant’s contractor(s) in the
completion of such work after reasonable notice from Landlord.  If the parties disagree as to whether or not
a “Tenant Delay” has occurred, the parties shall resolve such dispute through
arbitration as provided in Section 37. 
As used in this Lease, “Month” shall mean a calendar month, except that
if the Term beings on a day other than the first day of a calendar month, the
first “month” shall be the period from (and including) the Commencement Date
through (and including) the last day of the first full calendar month following
the Commencement Date falls and if the Term ends on a day other than the last
day of a calendar month, the last “month” shall be the period from (and
including) the day on which the Term ends. Landlord and Tenant each will use
commercially reasonable efforts to accommodate the other’s work, so that
neither unreasonably interferes with or causes delay to the other.


 


2.2
Landlord to Provide Notice. 
Landlord shall provide Tenant with six (6) months prior written
notice of any revision in the delivery date for any of the floors, Landlord
shall update the notice upon any material modification which would affect
Tenant’s construction drawings.  Landlord
shall provide Tenant written notice thirty (30) days prior to the completion
date for any floors to be delivered to Tenant for construction of tenant
improvements. Landlord shall provide Tenant not less than 60 days prior written
notice of the date the base building improvements for the floors of the
Building will be completed and a temporary certificate of occupancy issued.


 


3.               RENT


 


3.1 Base Rent. Tenant agrees to pay to
Landlord the Base Rent set forth in the Basic Lease Information, without prior
notice or demand, set off or deduction except as permitted in this Lease, on
the first day of each and every calendar month during the Term as provided
above.  The Base Rent shall be increased
as of the end of the fifth (5th) Lease Year and as of the end of the
tenth (10th) Lease Year (each as “Adjustment Date”) if as of an
Adjustment Date, the Consumer Price Index for All Urban Consumers, U.S. City
Average (“Index”), published by the United States Department of Labor’s Bureau
of Labor Statistics, has increased over the Base Period Index.  For purposes of this Lease, the Base Period
Index is the Index for the calendar month in which the Commencement Date
occurs.  The Base Period Index shall be
compared with the Index for the month in which the Adjustment Date occurs (“Comparison
Month”). If the Index for any Comparison Month is higher than the Base Period
Index, then the Base Rent shall be increased by the identical percentage
increase of the Index for the Comparison Month over the Base Index commencing
with the next Base Rent payment date. In no event shall the Base Rent be less
than that set forth hereinabove. If the Bureau of Labor Statistics discontinues
publication of the Index, publishes the Index less frequently, or alters the
Index in a material manner, then Landlord may adopt a substitute Index or
procedure which reasonably reflects and monitors consumer prices. Landlord and
Tenant hereby agree to promptly enter into a written amendment to this Lease
evidencing any such increase in Base Rent.


 


33

















 


Base
Rent for any partial month at the beginning or end of the Term shall be prorated
based on the actual number of days in that month.


 


3.2
Additional Rent. Landlord and Tenant intend that this shall be a “net”
lease, pursuant to which Tenant pays or reimburses Landlord for all costs and
expenses incurred in connection with the management, operation, maintenance,
and repair of the Property, as further provided herein.


 


(a)          Definitions.


 


(1)          “Operating Costs” means all
commercially reasonable, actual and necessary costs of managing, operating,
maintaining and repairing the Property, including all costs, expenditures, fees
and charges for: (A) operation, maintenance and repair of the Building
including all common areas and other improvements or facilities located on, in
or under the Property relating to the Building, and including structural and
non-structural repairs, repair or replacement of glass (interior or exterior),
sky lights located within or on the Building, floors doors, landscaping and
other repairs and replacements, but excluding all structural repairs, upgrades
or replacements except those necessitated by, or associated with Tenant
Improvements of Tenant for other than general office purposes, such as
libraries, high density filing stations, computer mainframes and vaults: (B) all
costs of operating, maintaining, repairing and replacing the heating,
ventilating and air-conditioning (“HVAC”), and plumbing, electrical, lighting,
fire protection, life safety, security, elevator and mechanical systems serving
the Building (“Building Systems”) and other operating equipment, except those
systems which are separately metered for Tenant’s use for which Tenant shall
pay all charges relating thereto separately: (provided that the amount of any
capital expenditures (i.e. expenditures that are to be capitalized, rather than
expensed, under the Internal Revenue Code) shall be amortized on a
straight-line basis over the applicable recovery period of the capital item so
replaced determined in accordance with the Internal Revenue Code, with interest
on the unamortized balance at a rate equal to the Prime Rate (as that term is
defined below) plus one percent (1%)): (C) costs of maintenance and
replacement of landscaping, sidewalks, curbs, gutters, walkways, driveways,
loading areas, utility lines, fences and signs located on the Property and
equipment and all other elements of the Property provided, however that the
amount of any capital expenditure shall be amortized on a straight line basis
over the applicable recovery period of the capital expenditure determined in
accordance with the Internal Revenue Code, with interest on the unamortized
balance at a rate equal to the Prime Rate plus one percent (1%)). (D) Utilities
and services (including recycling programs and trash removal), and associated
supplies and materials, except those utilities and services for which Tenant
pays separately; (E) compensation (including employment taxes and fringe
benefits) for persons who perform duties in connection with the operation,
management, maintenance and repair of the Building, such compensation to be
appropriately allocated for persons who also perform duties unrelated to the
Building; (F) property including coverage for earthquake and flood, if
required by Lender and if so, 


 


34

















 


policies with commercially reasonable premiums and deductibles)
liability, rental income and other insurance relating to the Property, and
expenditures for deductive amounts paid under such insurance provided, however,
that the total amount of any deductible included as an Operating Cost hall not
exceed (G) licenses, permits and inspections; (H) complying with the
requirements of any law, statue, ordinance or governmental rule or
regulation or any orders pursuant thereto (collectively (“Laws”) enacted,
adopted or effective and enacted or adopted and mandated prior to the
Commencement Date but not including capital expenditures, the cost of which are
addressed in subsection (I) below (1) amortization of capital
improvements but only to the extent required to comply with Laws, or which actually
reduce Operating Costs (but only to the extent that they do), with interest on
the unamortized balance at a rate equal to the Prime Rate plus one percent
(1%)), in accordance with generally accepted accounting practices consistently
applied; (J) an office in the Project (excluding expenses of furnishing
and equipping such office); (K) property management fees (not to exceed
two percent (2%) of the gross income from the Project (i.e. Base rent plus
Operating Expenses except Tenant’s separately measured expenses); (L) accounting,
legal and other professional services incurred in connection with the operation
of the Property and the calculation of Operating Costs and Taxes; (M) a
reasonable allowance for depreciation on machinery and equipment used to maintain
the Property and any personal property tax on personal property owned by
Landlord and used in the operation of the Property; (N) contesting the
validity or applicability of any Laws that may affect the Property provided
Landlord notifies Tenant in writing of its intent to contest such Laws and
Tenant fails to object to such contest in writing delivered to Landlord within
fifteen (15) days of Landlord’s notice; (O) the Building’s Allocable Share
of any shared or common area maintenance fees and expenses (including costs and
expenses of operating, managing, owning and maintaining the common areas of the
Project), which costs and expenses are of kind and nature of Operating Costs
and Taxes; and (P) any other expense or charge, whether or not
hereinbefore described, which in accordance with generally accepted property
management practices would be considered an expense of managing, operating,
maintaining and repairing the Property. 
Operating Costs shall also include the Building’s Allocable Share of
expenses, costs and disbursements relating to or incurred or paid in connection
with the management, operation, repair and maintenance of the Project of which
the Building is a part, as equitably determined by Landlord, which expenses,
costs and disbursements relate to or benefit directly the Building or the
Project. Operating costs for any year during which average occupancy of the
Building is less than one hundred percent (100%) during the entire calendar
year. For purposes of this Section 3.2(a)(1), the “Prime Rate” for a
particular expenditure shall be the prime rate as announced by the Bank of
America, San Francisco, or its successor (without subsequent modification), as
of the date of completion of construction of the item for which the expenditure
is made. Landlord acknowledges and agrees that Landlord shall use commercially 


 


35

















 


reasonable judgment (based upon other landlords of other first class
office projects in the downtown San Francisco area) in determining whether or
not to replace any aspect of the Building, Building systems and the like.


 


Notwithstanding
the foregoing, Operating Costs shall not include (i) capital expenditures
other than those specifically enumerated above in Sections 3.2(a)(1)(I) above;
(ii) costs of special services rendered to individual tenants (including
Tenant) for which a special charge is made; (iii) interest and principal
payments on loans or indebtedness secured by the Building; (iv) costs of
improvements for Tenant or other tenants of the Building; (v) costs of
services or other benefits of a type which are not available to Tenant but
which are available to other tenants or occupants, and costs for which Landlord
is entitled to be reimbursed by other tenants of the Building other than
through payment of tenants shares of increases in Operating Costs and Taxes; (vii) depreciation
or amortization other than as specifically enumerated in the definition of
Operating Costs above; (viii) costs, fines or penalties incurred due to
Landlord’s violation of any Law; (ix) repairs, alterations, additions,
improvements or replacements made to rectify or correct any defect in the
design, materials or workmanship of the Building or common areas or to comply
with any requirements of any governmental authority in effect as of the
Commencement Date; (x) damage and repairs attributable to fire or other
casualty of the type which Landlord has insured to the extent of proceeds
actually recovered by Landlord or would have been recoverable had Landlord carried
any insurance expressly required to be carried by Landlord her under; (xi)
damage and repairs necessitated by the negligence or willful misconduct of
Landlord or Landlord’s employees, contractors or agents; (xii) executive
salaries above the level of Building Manager; (xiii) that portion of salaries
of service personnel attributable to services that such service personnel
perform that are not in connection with the management, operation, repair or
maintenance of the Building or Common Areas; (xiv) Landlord’s general overhead
expenses; (xv) costs (including permit, license and inspection fees) incurred
in renovating or otherwise improving, decorating, painting or altering space
for other tenants or other occupants or vacant, leasable space in the Building;
(xvi) interest, penalties or other costs arising out of Landlord’s failure to
make timely payment of its obligations; (xvii) overhead and profit paid to
subsidiaries or affiliate of Landlord for management or other services for the
Property or the Building or for supplies or other material to the extent that
the costs of the services, supplies or material exceed the market costs of the
services, supplies or materials if they were not provided by a subsidiary or an
affiliate; (xviii) costs incurred to test, survey, cleanup, contain, abate,
remove or otherwise remedy Hazardous Materials (as defined in Section 5.2(a))
from the Property unless the Hazardous Materials were in, about or on the
Property as a result of Tenant’s acts or omissions; (xix) costs incurred in
connection with any portion of the Project which is used for parking (e.g. the
Parking Facility) and for which parking fees are charged; (xx) costs incurred
in advertising and promotional activities for the Project (including gifts and
promotional services to tenants or other parties); (xxi) development or impact
fees or similar governmental charges paid by Landlord in order to develop and 


 


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construct
the Building and the Project; and (xxii) costs incurred in connection with any
portion of the Project which is used for retail purposes. In no event shall
Landlord collect more than 100% of any cost actually incurred by Landlord.


 


(2)          “Taxes” means: all real
property taxes and general, special or district assessments or other
governmental impositions, or whatever kind, nature of origin imposed on or by
reason of the ownership or use of the Property; governmental charges, fees or
assessments for transit or traffic mitigation (including area-wide traffic
improvement assessments and transportation system management fees), housing,
plaice, fire or other governmental service or purported benefits to the
Property; service payments in lieu of takes and taxes and assessments of every
kind and nature whatsoever levied or assessed in addition to, in lieu of or in
substitution for existing or additional real property taxes on the Property;
any increases in the foregoing caused by changes in assessed valuation, tax
rate or other factors or circumstances; and the reasonable cost of contesting
by appropriate proceedings the amount or validity of any taxes, assessments or
charges described above, provided Landlord notifies Tenant in writing of its
intent to contest such taxes or assessments and Tenant fails to object to such
contest in writing delivered to Landlord within fifteen (15) days of Landlord’s
notice. To the extent paid or owed by Tenant or other tenants as “Tenant’s
Taxes” (as defined in Section 8-Tenant’s Taxes),
“Tenant’s Taxes” shall be excluded from Taxes. 
Taxes for any year in which the building is less than fully occupied
shall be calculated based upon Taxes which would have been incurred if the
Building were fully assessed by the appropriate taxing authority to reflect a
one hundred percent (100%) occupied Building with all tenant’s improvements
completed.  Not withstanding anything to
the contrary contained in this Lease, the following shall not constitute Taxes
for purposes of this Lease; (i) state, local, federal, personal or
corporate income tax measured by the income of Landlord; (ii) any estate
or inheritance taxes; (iii) any franchise, succession or corporate
transfer taxes; (iv) interest on taxes or penalties resulting from
Landlord’s failure to pay taxes; and (v) real estate taxes resulting from
over standard improvements made by other tenants. In no event shall Landlord
collect more than 100% of any cost actually incurred by Landlord.


 


Not
withstanding the foregoing, if any sale or change of ownership of all or any
portion of the Property is consummated during the first two (2) years of
the Term and, solely as a result, all or part of the Property is reassessed for
tax purposes by the appropriate governmental authority, then (a) during
the first year of the Term, Tenant shall be required to pay Tenant’s Share of
the real property taxes that would have been in effect if Landlord has not
consummated the transfer, including, without limitation, the amount by which
the Taxes would have increased under Proposition 13 pursuant to the annual
mandated or permitted tax increases there under even if the transfer had not
occurred (the “Original Tax Base”), but no portion of the increase in Taxes
resulting solely from the transfer over the Original 


 


37

















 


Tax
Base (the “Transfer Increase”); and (b) during the second year of the
Term, Tenant shall pay Tenant’s Share of the Original Tax Base and fifty
percent (50%) of the Transfer Increase.


 


(3)          “Tenant’s Share” means the
Rentable Area of the Premises divided by the total Rentable Area of the
Building.  Landlord and Tenant
acknowledge and agree that Tenant’s Share of the Building shall be one hundred
percent (100%) as Tenant is leasing all of the rentable office area in such
Building.  If the Rentable Area of the
Building is changed or the Rentable Area of the Premises is changed by Tenant’s
leasing of additional space hereunder or for any other reason, Tenant’s Share
shall be adjusted accordingly.


 


(b)         Additional Rent


 


(1)   Tenant shall
pay Landlord as “Additional Rent” for each calendar year or portion of thereof
during the Rent Period Tenant’s Share of the sum of (i) Operating Costs
for the period, and (ii) Taxes for such period.


 


(2)   Prior to the
Commencement Date, and prior to the end of each calendar year thereafter,
Landlord shall notify Tenant of Landlord’s reasonable estimate of Operating
Costs, Taxes and Tenant’s Additional Rent for the following calendar year.  Landlord’s estimate with respect to the
Building shall include a comparison, by each category, of the prior year’s
Operating Costs (in terms of both dollars and percentages) and, if requested by
Tenant, shall include reasonable detailed documentation to support Landlord’s
estimate. If Landlord does not provide an estimate (and, if requested by
Tenant, reasonable detailed documentation) to Tenant prior to the commencement
of the new calendar year, Tenant shall continue, until the month after Tenant
receives Landlord’s estimate of the revised Operating Costs (and, if requested
by Tenant, reasonable detailed documentation), to pay the Operating Costs based
on the prior year’s estimate.  Commencing
on the first day of January of each calendar year and continuing on the
first day of every month thereafter in such year, Tenant shall pay to Landlord
one-twelfth (1/12th) of the estimated Additional Rent. If Landlord
thereafter reasonably estimates that Operating Costs or Taxes for such year
will vary from Landlord’s prior estimate, Landlord may, by written notice to
Tenant, revise the estimate for such year (and Additional Rent shall thereafter
be payable based on the revised estimate); provided, however that Landlord
shall only be permitted to revise its estimate of the Operating Costs and/or
Taxes once during each calendar year. In the event that Landlord reasonably
believes that one or more categories of Operating Costs will be five percent
(5%) or more than the estimated last provided to Tenant then Landlord shall
notify Tenant prior to issuing the year end statement. Landlord’s statement of
Operating Costs shall be certified by a certified public accountant or signed
and certified to be correct by Landlord.


 


(3)          (i) As soon as
reasonably practicable after the end of each calendar year of the Term, but in
no event later than July 1st of each year, Landlord shall furnish
Tenant a statement with respect to such year, showing Operating Costs, Taxes
and Additional Rent for the year, and the total payments made by Tenant with
respect thereto.  Any 


 


38

















 


objection
of Tenant to Landlord’s statement and resolution of any dispute shall not
postpone the time for payment of any amounts due Tenant or Landlord based on
Landlord’s statement, nor shall any failure of Landlord to deliver Landlord’s
statement in a timely manner relieve Tenant of Tenant’s obligation to pay any
amounts due Landlord based on Landlord’s statement.


 


(4)          If Tenant’s Additional Rent
as finally determined for the year exceeds the total payments made by Tenant on
account thereof, Tenant shall pay Landlord the deficiency within thirty (30)
days of Tenant’s receipt of Landlord’s statement. If the total payments made by
Tenant on account thereof exceed Tenant’s Additional Rent as finally determined
for the year, Landlord shall credit toward the rent next due from Tenant under
this Lease an amount equal to Tenant’s excess payment. For any partial calendar
year at the beginning or end of the Term during which period Tenant is required
to pay Additional Rent under this Lease, Additional Rent shall be prorated on
the basis of 365-day year by computing Tenant’s Share of Operating Costs and
Taxes for the entire year and then prorating such amount for the number of days
during such year included in the Term during which period Tenant is required to
pay Additional Rent under this Lease. Notwithstanding the termination of this
Lease, Landlord shall pay to Tenant or Tenant shall pay to Landlord, as the
case may be, within thirty (30) days after Tenant’s receipt of Landlord’s final
statement for the calendar year in which this Lease terminates, the difference
between Tenant’s Additional Rent, as finally determined by Landlord, and the
total amount previously paid by Tenant on account thereof.


 


If
for any reason Taxes for any year during the Term are reduced, refunded or
otherwise changed, Tenant’s Additional rent shall be adjusted accordingly. If
Taxes are temporarily reduced as a result of space in the Building being leased
to a tenant that is entitled to an exemption from property, taxes or other
taxes, then for purposed of determining Additional Rent for each year in which
Taxes are reduced by any such exemption, Taxes for such year shall be
calculated on the basis of the amount the Taxes for the year would have been in
the absence of the exemption. The obligations of Landlord to refund any
overpayment of Additional Rent and of Tenant to pay any Additional Rent not
previously paid shall survive the expiration of the Term.


 


(5)          In the event that within one
(1) year after Tenant’s receipt of the Statement for the prior calendar
year, Tenant reasonably believes that certain of the Operating Costs charged by
Landlord include costs that are not properly included within the term “Operating
Costs” or that Landlord has erred in calculating same, Tenant shall have the
right to audit Landlord’s books and records in accordance with this paragraph.
Tenant shall e In the event that within one (1) year after Tenant’s
receipt of the Statement for the prior calendar year, Tenant reasonably
believes that certain of the Operating Costs charged by Landlord include costs
that are not properly included within the term “Operating Costs” or that
Landlord has erred in calculating same, Tenant shall have the right to audit
Landlord’s books and records in accordance with this paragraph. Tenant shall
exercise such audit 


 


39

















 


right
by providing Landlord with a written notice of Tenant’s exercise of such audit
right within such one-year period and a statement enumerating reasonably
detailed reasons for Tenant’s objections to the statement issued by Landlord
(the “Audit Notice”). Upon the receipt by Landlord of an Audit Notice, Landlord
shall instruct its property manager at the Building to meet with a designated
employee or representative of Tenant (the “Tenant Representative”) to discuss
the objections set forth in the Audit Notice, Landlord shall provide the Tenant
Representative with reasonable access to Landlord’s books and records at the
Building relating to Operating Costs for the calendar year in question in order
to attempt to resolve the issues raised by Tenant in the Audit Notice. If,
within thirty (30) days after Landlord’s receipt of the Audit Notice, Landlord
and Tenant are unable to resolve Tenant’s objections, then not later than sixty
(60) days after the expiration of such 30-day period, Tenant shall notify
Landlord if Tenant wishes to employ an independent, reputable certified public
accounting firm charging for its services on an hourly rate (and not a
contingent fee) basis (“Acceptable Accountants”) to inspect and audit Landlord’s
books and records for the Building relating to the objections raised in Tenant’s
statement. Such audit shall be limited to a determination of whether or not
Landlord calculated the Operating Costs in accordance with the terms and
conditions of this Lease and normal and customary accounting methods used by
owners of similar buildings in the area for calculating Tenant’s Additional
Rent. All costs and expenses of any such audit shall be paid by Tenant, unless
a discrepancy of three percent (3%) or greater is found in the Operating
Expenses to be paid by Tenant, in which event Landlord shall pay the reasonable
out-of-pocket cost of the audit. Any audit performed pursuant to the terms of
this section shall be conducted only by the Acceptable Accountants at the
offices of Landlord’s property manager at the Building. Notwithstanding
anything contained herein to the contrary, Tenant shall be entitled to exercise
its audit right pursuant to this section only in strict accordance with the
foregoing procedures no more often than once per calendar year and each such
audit shall relate only to the calendar year most recently ended except if such
audit reveals a bona fide error or overcharge in which case Tenant shall have
the right to audit previous years books and records solely as to such expense
item or charge. In the event that Tenant fails to notify Landlord within the
foregoing one-year period that Tenant object to the statements, then Tenant’s
right to audit such year’s statement shall be null and void. In the event of a
bona fide dispute between Landlord and Tenant as to the validity of the results
of any audit by Tenant or amount of any claimed overcharge, Landlord and Tenant
hereby agree to resolve such dispute in accordance with the terms of Section 37
of this Lease.


 


3.3
Payment of Rent  All amounts
payable or reimbursable by Tenant under this Lease, including late charges and
interest, shall constitute rent and shall be payable and recoverable as rent in
the manner provided in this Lease. All sums payable to Landlord on demand under
the terms of this Lease shall be payable within thirty days after the receipt
of written invoice from


 


40
















 


Landlord of the amounts due. Except as otherwise provided by this
Lease, all rent shall be paid without offset, recoupment or deduction in lawful
money of the United States of America to Landlord at Landlord’s Address for
Payment of Rent as set forth in the Basic Lease Information, or to such other
person or at such other place as Landlord may from time to time designate to
Tenant in writing.


 


4.     SECURITY
DEPOSIT. Intentionally Deleted.


 


5.     USE
AND COMPLIANCE WITH LAWS


 


5.1 (a) Uses. The Premises shall be used for general office, which
shall include engineering and any other ancillary office use with is consistent
with the operation of the Building as a first class office building and for no
other use or purpose. Tenant shall comply with all present and future Laws
relating to Tenant’s use or occupancy of the Premises (and make any repairs,
alterations or improvements as required to comply with all such Laws), and
shall observe the “Building Rules” (as defined in Section 27-Rules and
Regulations); provided, however, Tenant shall not be responsible for or
required to make structural improvements or alterations to the Premises except
to the extent the structural improvements or alterations are required as a
result of Tenant’s use of the Premises for other than general office purposes,
such as the construction or installation of high density filing systems,
libraries, engineering labs or server rooms. Tenant shall not do, bring, keep
or sell anything in or about the Premises that is prohibited by, or that will cause
a cancellation of or a material increase in the existing premium for, any
insurance policy covering the Property or any part thereof. Tenant shall not
permit the Premises to be occupied or used in any manner that will constitute
waste or a nuisance, or disturb the quiet enjoyment of or otherwise annoy other
tenants in the Building. Without limiting the foregoing, the Premises shall not
be used for educational activities (except Tenant’s business training
activities), practice of medicine or any of the healing arts or providing
social services. Tenant shall not, without the prior consent of Landlord, which
consent shall not be unreasonably withheld, conditioned or delayed, (i) bring
into the Building or the Premises anything that may cause substantial noise,
odor or vibration, overload the floors in the remises or the Building or any of
the HVAC or other Building Systems, or jeopardize the structural integrity of
the Building or any part thereof; or (ii) connect to the utility systems
of the Building any apparatus, machinery or other equipment which has a total
connected electrical design load in excess of the rated design load for the
Building. Subject to Landlord’s rights hereunder to limit access to the
Building or the Premises in the event of an emergency or in connection with
work or repairs performed by Landlord and subject to Landlord’s procedures with
respect to after-hours access, Tenant shall have the right to access the
Premises twenty-four (24) hours a day, seven (7) days a week, 365 days per
year. Tenant shall have the right, if and to the extent permitted by applicable
Laws and in accordance therewith to use the connecting stairways in the
Building so long as such use by Tenant does not create a fire hazard or
interfere with the functioning of the HVAC system. Tenant shall have the right
to install its own external security car reader system for access to the
building and as long as Tenant leases all of the office space in the Building
to establish dedicated, secure elevators, including freight elevators, and
secured lobby access to those elevators serving Tenant’s floors, subject to
Landlord’s right of access to all times as provided elsewhere in this lease and
subject to the rules and regulations regarding access/security procedures
developed in accordance with sub clause (b) below.


 


(b) Security/Access Control. Landlord and Tenant hereby agree to
cooperate in good faith to jointly develop access and security procedures and
protocol for the Building. So long as Tenant is leasing all of the office space
in the Building, Tenant, at Tenant’s sole cost and expense, will have the right
to: provide on-site security measure for the Building, including the right to
have a lobby guard 24 hours/7days/365 days per year, 


 


 


41

















 


installation of security cameras, require the registration of all
persons entering or leaving the Building during non-business hours of
operation, and require identification for access to the Building. In the event
Tenant ceases to lease all of the office space in the Building, Landlord may
elect to undertake such procedures as Landlord deems appropriate for other
multi-tenant office buildings in the Project at Landlord’s expense (subject to
Landlord’s right to be reimbursed as part of Operating Costs). Further,
Landlord will evacuate the Building for cause, suspected cause, or for drill
purposes, and take other actions that Landlord deems necessary or appropriate
to prevent any threat of property loss or damage, bodily injury or business
interruption; provided, however, that such measure shall be implemented in a
way as not to inconvenience Tenants unreasonably with at least thirty (30) days
prior notice to Tenant. Further, Landlord shall provide, at Landlord’s cost
(subject to reimbursement by Tenant as part of Operating Costs), a guard who
shall patrol all of the Project, including the Building, twenty-four (24) hours
per day, seven (7) days per week. Tenant shall pay separately all costs
and expenses of any security services or measures initiated by Tenant. All
costs and security measures provided for or contracted for by Landlord shall be
paid by Landlord subject to Tenant’s obligation to reimburse such costs and
expenses as part of Operating Costs. If and to the extent Landlord is responsible
for security/access control for the Building, Tenant or its Representatives
shall cooperate and comply with such security measures, and Tenant shall
request that Tenant’s Visitors cooperate and comply with such security
measures.  Landlord, its agents and
employees shall have no liability to Tenant or its Representatives or Visitors
for the implementation or exercise of, or the failure to implement or exercise,
any such security measures or for any resulting disturbance of Tenant’s use or
enjoyment of the Premises. Landlord agrees that Landlord and any of its agents
or contractors, who will need unaccompanied access to the Premises, must first
pass Tenant’s corporate security screening program, “Sunscreen,” before access
is granted, except in case of emergencies. IF any of Landlord’s agents or
contractors fail such security screening program, such agents and other
contractors shall be accompanied by a representative of Tenant at all times in
the Premises during business hours and shall not be allowed on the Premises
after business hours. Landlord hereby agrees that the areas containing exterior
doors and loading docks shall contain illumination at a minimum of five (5) food
candles of light at six (6) feet above ground.


 


(c) MPOE/Risers, Landlord and Tenant hereby acknowledge and agree
that so long as Tenant leases all of the office space in the Building, Tenant
shall have the sole right to use and control the Building’s main point of entry
(MPOE), risers and chases. The MPOE shall be a single 8 foot by 8 foot closet.
While Tenant shall have the right to secure such MPOE areas, Landlord shall
have the right of access at all times but Landlord must be accompanied by a
representative of Tenant except in cases of emergency.


 


5.2 Use of Project. Throughout the Term, Landlord shall maintain
and operate the Project as a Class A office complex, and shall not allow
any portion of the Project to be used for any use that is not consistent with a
Class-A office complex.


 


5.3 Hazardous Materials


 


(a) Definitions


 


(1) “Hazardous Materials”
shall mean any substance: (A) that now or in the future is regulated or
governed by, requires investigation or remediation under, or is defined as a
hazardous waste, hazardous substance, pollutant or contaminant under any
governmental statute, code, ordinance, regulation, rule or order, and any
amendment thereto, including for example only the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C 9601 et seq., and the
Resource 


 


42

















 


Conservation and Recovery Act, 42 U.S.C 6901 et seq., or (B) that
is toxic, explosive, corrosive, flammable, radioactive, carcinogenic, dangerous
or otherwise hazardous, including gasoline, diesel fuel, petroleum
hydrocarbons, polychlorinated biphenyls (PCBs), asbestos, radon and urea
formaldehyde foam insulation.


 


(2) “Environmental
Requirements” shall mean all present and future Laws, orders,
permits, licenses, approvals, authorizations and other requirements of any kind
applicable to Hazardous Materials.


 


(3) “Handled by Tenant”
and “Handling by Tenant” shall mean and
refer to any installation, handling, generation, storage, use, disposal,
discharge, release, abatement, removal, transportation, or any other activity
of any type by Tenant or its agents, employees, contractors, licenses,
assignees, sub lessees, transferees or representatives (collectively, “Representatives”) or its guests, customers, invitees, or
visitors (collectively, “Visitors”), at
or about the Premises in connection with or involving Hazardous Materials.


 


(4) “Environmental Losses” shall mean
all costs and expenses of any kind, damages, including foreseeable and
unforeseeable consequential damages, fines and penalties incurred in connection
with any violation of Environmental Requirements by Tenant or its agents, or
contractors and all losses of any kind attributable to the diminution of value,
loss of use or adverse effects on marketability or use of any portion of the
Premises or Property resulting therefrom.


 


(b)Tenant’s Covenants. No Hazardous Materials shall be handled
by Tenant at or about the Premises or Property without Landlord’s prior written
consent, which consent may be granted, denied, or conditioned upon compliance
with Landlord’s requirements, all in Landlord’s absolute discretion.
Notwithstanding the foregoing, normal quantities and use of those Hazardous
Materials customarily used in the conduct of general office activities, such as
copier fluids and cleaning supplies (“Permitted Hazardous Materials”), may be
used and stored at the Premises without Landlord’s prior written consent,
provided that Tenant’s activities at or about the Premises and Property and the
Handling by Tenant of all Hazardous Materials shall comply at all time with all
Environmental Requirements. At the expiration or termination of this Lease,
Tenant shall promptly remove from the Premises and Property all Hazardous
Materials Handled by Tenant at the Premises of the Property. Tenant shall keep
Landlord fully and promptly informed of all Handling by Tenant of Hazardous
Materials other than Permitted Hazardous Materials. Tenant shall be responsible
and liable for the compliance with all the provisions of this Section by
all of Tenant’s Representatives and Visitors, and all of Tenant’s obligations
under this Section (including its indemnification obligations under
paragraph (e) below) shall survive the expiration or termination of this
Lease.


 


(c) Compliance. Tenant shall at Tenant’s expense promptly
take all actions required by any governmental agency or entity, in connection
with or as a result of the Handling by Tenant of Hazardous Materials at or
about the Premises or Property, including inspection and testing, performing
all cleanup, removal and remediation work required with respect to those
Hazardous Materials, complying with all closure requirements and post-closure
monitoring, and filing all required reports or plans. All of the foregoing work
and all Handling by Tenant of all Hazardous Materials shall be performed in a
good, safe and workmanlike manner by consultants qualified and licensed to
undertake such work and in a manner that will not unreasonably interfere with
any other tenants quiet enjoyment of the Property or Landlord’s use, operation,
leasing and sale of the Property. Tenant shall deliver to Landlord prior to
delivery, to any governmental agency, or promptly after receipt from any such
agency, copies of all permits, manifests, closure or 


 


43

















 


remedial action plans, notices, and all other documents relating to the
Handling by Tenant of Hazardous Materials at or about the Premises or Property.
If any lien attaches to the Premises or the Property in connection with or as a
result of the Handling by Tenant of Hazardous Materials, and Tenant does not
cause the same to be released, by payment, bonding or otherwise, within ten (10) business
days after the attachment thereof, Landlord shall have the right but not the
obligation to cause the same to be released and any sums expended by Landlord
in connection therewith shall be payable by Tenant on demand.


 


(d) Landlord’s Rights. Landlord shall have the right, but
not the obligation, to enter the Premises upon forty-eight (48) hours prior
written notice to Tenant, except in instances in which Landlord, in its
reasonable discretion, deems an emergency to exist, at any reasonable time (i) to
confirm Tenant’s compliance with the provisions of this Section, and (ii) to
perform Tenant’s obligations under this section if Tenant has failed to do so
or commence to do so within five (5) days after written notice to Tenant.
Landlord shall also have the right to engage qualified Hazardous Materials
consultants to inspect the Premises and review the Handling by Tenant of
Hazardous Materials, including review of all permits, reports, plans, and other
documents regarding same, the costs of which shall be reimbursed by Tenant to
Landlord within ten (10) days written request (with supporting invoice)
therefore to the extent such costs are incurred by Landlord in connection with
or as a result of Tenant’s breach of any obligations hereunder or a compliance
activity by Tenant that is governmentally mandated. Tenant shall pay to
Landlord on demand the costs of Landlord’s consultants’ fees and all costs
incurred by Landlord in performing Tenant’s obligations under this Section.
Landlord shall use reasonable efforts to minimize any interference with Tenant’s
business caused by Landlord’s entry into the Premises, but Landlord shall not
be responsible for any interference caused thereby.


 


(e) Tenant’s Indemnification. Tenant agrees to indemnify,
defend and hold harmless Landlord and its partners or members and its or their
partners, members, directors, officers, shareholders, employees and agents from
all Environmental Losses and all other claims, actions, losses, damages,
liabilities, costs and expenses of every kind, including reasonable attorneys’,
experts’ and consultants’ fees and costs, incurred at any time and arising from
or in connection with the Handling by Tenant of Hazardous Materials at or about
the Property or Tenant’s failure to comply in full with all Environmental
Requirements with respect to Premises.


 


(f) Landlord’s Indemnification. Landlord shall indemnify,
defend, protect and hold harmless Tenant and its officers, directors,
employees, shareholders and agents from and against any and all claims, loss,
proceedings, damages, causes of action, liability, costs or expenses (including
reasonable attorneys’ fees) arising as a result of the handling, installation,
storage, generation, use, disposal, discharge, release, abatement, removal, or
transportation of Hazardous Materials by Landlord, its agents, employees,
contractors or representatives in, on or about the Premises, the Building or
the Property, which are not the result of the activities of Tenant.


 


6.               Alterations.


 


6.1 Tenant shall not make any alterations, improvements or changes to
the Premises, other than the Tenant Improvements (“Alterations”),
without Landlord’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed, which consent shall be given by
Landlord if at all, within five (5) business days after Landlord’s receipt
of Tenant’s request to make such Alterations and all other information required
to be submitted to Landlord pursuant to this Section 6. Any such
Alterations shall be completed by Tenant at Tenant’s sole cost and expense: (i) with
due diligence, in a good and workmanlike manner, using new materials: (ii) in
compliance with plans 


 


44

















 


and specifications reasonably approved by Landlord: (iii) in
compliance with the construction rules and regulations reasonably
promulgated by Landlord from time to time: and (iv) in accordance with all
applicable Laws (including all work, whether structural or non-structural,
inside or outside the Premises, required to comply fully with all applicable
Laws and necessitated by Tenant’s work). Landlord shall notify Tenant in
writing at the time that Landlord consents to the Alterations, or, if no
consent is required, within ten (10) days after Tenant’s written request,
as to whether Tenant must remove the Alterations at the end of the Term:
provided, however, that Tenant shall not be required to remove any general office
improvements but shall remove and repair to its original state, all high
density filing systems, server rooms, computer mainframes, libraries, telecom
nodes, satellite dishes and signs erected with Landlord’s approval under this
Lease. Landlord hereby agrees to notify Tenant as part of Landlord’s review of
Tenant’s Final Construction Documents whether or not any of the tenant
improvements to the Premises which Tenant will be making will be required to be
removed by Tenant pursuant to this Section 6.1, provided, however, that
Landlord may not require Tenant to remove the partitions, doors or other
vertical elements of offices, conference rooms, break rooms, copy rooms and
other general purpose office rooms, or other standard general-purpose office improvements.
Landlord will consent to a space plan characterized by a high-density of
private offices similar to Tenant’s preliminary plans attached hereto as Exhibit G.
Notwithstanding anything to the contrary contained in this Section, Tenant
shall have the right, without Landlord’s consent, to make non-structural
alterations, additions or improvements that to not affect the Building
Structure, Building Systems (except for Building Systems included in Tenant
Improvements), the HVAC, or the Common Areas or exterior of the Building to the
extent the cost of any particular alteration, addition or improvement costs
less than Two Hundred Thousand Dollars ($200,000.00), excluding carpet and
paint. If any work outside the Premises or any work on or adjustment to any of
the Building Systems, is required in connection with or as a result of Tenant’s
work, such work shall be performed at Tenant’s expense by contractors
reasonably approved by Landlord. Landlord’s right to review and approve (or
withhold approval of) Tenant’s plans, drawings, specifications, contractor(s) and
other aspects of construction work proposed by Tenant is intended solely to
protect Landlord, the Property and Landlord’s interests. NO approval or consent
by Landlord shall be deemed or construed to be a representation or warranty by
Landlord as to the adequacy, sufficiency, fitness or suitability thereof or
compliance thereof with applicable Laws or other requirements. Except as
otherwise provided in Landlord’s consent, all Alterations shall upon installation
become part of the realty and be the property of Landlord.


 


6.2 Before making any Alterations which require Landlord’s consent,
Tenant shall submit to Landlord for Landlord’s prior approval schematic
drawings of the work to be performed, and the name of the contractor and all
subcontractors proposed by Tenant to make the Alterations. Tenant shall
reimburse Landlord within 30 days of receipt of a written invoice for all
reasonable and actual out-of-pocket expenses incurred by Landlord in connection
with any Alterations made by Tenant, including actual and reasonable fees
charged by Landlord’s contractors or consultants to review plans and
specifications prepared by Tenant and to update the existing as-built plans and
specifications of the Building to reflect the Alterations, not to exceed Five
Thousand Dollars ($5,000.00). Tenant shall obtain all applicable permits,
authorizations and governmental approvals and deliver copies of the same to
Landlord before commencement of any Alterations.


 


6.3 Tenant shall keep the Premises and the Property free and clear of
all liens arising out of any work performed, materials furnished or obligations
incurred by Tenant. If any such lien attaches to the Premises or the Property,
and Tenant does not cause the same to be released by payment, bonding or
otherwise within ten (10) business days after the attachment thereof,
Landlord shall have the right but not the obligation to cause the 


 


45

















 


same to be released, and any sums expended by Landlord in connection
therewith shall be payable by Tenant within 30 days after receipt of written
invoice with interest thereon from the date of expenditure by Landlord at the
Interest Rate (as defined in Section 16.2-Interest).
Tenant shall give Landlord at least ten (10) days notice prior to the
commencement of any Alterations and cooperate with Landlord in posting and
maintaining notices of non-responsibility in connection therewith.


 


6.4 Subject to the provisions of Section 5- Use and Compliance
with Laws and the foregoing provisions of this Section, Tenant may install and
maintain furnishings, equipment, movable partitions, business equipment and
other trade fixtures (“Trade Fixtures”) in the Premises, provided that the
Trade Fixtures do not become and integral part of the Premises or the Building.
Tenant shall promptly repair any damage to the Premises or the Building caused
by any installation or removal of such Trade Fixtures.


 


7.               MAINTENANCE AND
REPAIRS.


 


7.1 By taking possession of the Premises Tenant agrees that the
Premises are then in a good and tenantable condition, subject to latent defects
of which Tenant must notify Landlord in writing within one (1) year after
the delivery of the Premises affected by the defect to Tenant, except for
latent structural defects of which Tenant must notify Landlord within 10 years
after such date. During the Term, Tenant at Tenant’s expense but under the
direction of Landlord, shall repair and maintain the Premises, including the
interior walls, floor coverings, ceiling (ceiling tiles and grid), Tenant
Improvements, Alterations, fire extinguishers, outlets and fixtures, and any
appliances (including dishwashers, hot water heaters and garbage disposers) in
the Premises, in a condition customary for well managed, high quality office
buildings in San Francisco and keep the Premises in a clean, safe and orderly
condition.


 


7.2 Landlord shall maintain or cause to be maintained in a manner
customary for well managed, high quality office buildings in San Francisco, the
structural portions of the roof and roof membrane, foundations, floors and
exterior walls of the Building, the Building Systems (except for Building
Systems included in the Tenant Improvements), and the public and common areas
of the Property, such as elevators, stairs, corridors and public restrooms;
provided, however, that Tenant shall pay the cost of repairs for damaged
occasioned by Tenant’s use of the Premises or the Property (other than normal
wear and tear and damage for which Landlord carries insurance) or any negligent
act or omission of Tenant or Tenant’s Representatives or Visitors. Landlord
shall be under no obligation to inspect the Premises. Tenant shall promptly
report in writing to Landlord any defective condition known to Tenant which
Landlord is required to repair. Landlord shall be responsible for latent
defects not discovered by Tenant through the normal course of inspection. As a
material part of the consideration for this Lease, Tenant hereby waives any
benefits of any applicable existing or future Law, including the provisions of
California Civil Code Sections 1932(1), 1941 and 1942, that allows a tenant to
make repairs at its landlord’s expense. In the event that Landlord defaults
under its obligations under this Lease, Tenant shall promptly notify Landlord
in writing of such default and Landlord shall have thirty (30) days within
which to cure such default (or if such default is not capable of being cured
within such time, Landlord shall diligently proceed to cure such default). In
the even that Landlord does not cure the default within such 30-day period or
does not diligently proceed to cure such default if such default is not capable
of being cured within such 30-day period, Tenant shall have the right to cure
such default on Landlord’s behalf and Landlord shall promptly reimburse Tenant
for all reasonable, out-of-pocket expenses incurred by Tenant in connection
with such cure.


 


7.3 Provided that Landlord’s activities do not materially and adversely
affect Tenant’s use of the Premises or the common areas of the Building during
normal business hours 


 


46

















 


on business days, Landlord hereby reserves the right, at any time and
from time to time, without liability to Tenant, and without constituting an
eviction, constructive or otherwise, or entitling Tenant to any abatement of
rent or to terminate this Lease or otherwise releasing Tenant from any of
Tenant’s obligations under this Lease:


 


(a) To make alterations, additions,
repairs, improvements to or in the Building;


 


(b) To change the Building’s name or
street address, subject to the terms of Section 35.2 hereof;


 


(c) To install and maintain any and all signs
on the exterior and interior of the Building, subject to Tenant’s rights under Section 35(Signage)
hereof; and


 


(d)         If any governmental
authority promulgates or revises any Law or imposes mandatory or voluntary
controls or guidelines on Landlord or the Property relating to the use of
conservation of energy or utilities or the reduction of automobile or other
emissions or reduction or management of traffic or parking on the Property
(collectively “Controls”), to comply with such Controls, if mandatory, or make
any alterations to the Property related thereto.


 


8.               TENANT’S TAXES. “Tenant’s Taxes” shall mean (a) all taxes, assessments,
license fees and other governmental charger or impositions levied or assessed
against or with respect to Tenant’s personal property or Trade Fixtures in the
Premises, whether any such imposition is levied directly against Tenant or
levied again Landlord or the Property, (b) all actual rental, excise,
sales or transaction privilege taxes arising out of this Lease (excluding,
however, state and federal personal or corporate income taxes measured by the
income of Landlord from all sources) imposed by any taxing authority upon
Landlord or upon Landlord’s receipt of any rent payable by Tenant pursuant to
the terms of this Lease (“Rental Tax”), and (c) any increase in Taxes
attributable to inclusion of a value placed on Tenant’s personal property,
Trade Fixtures or Alterations. Tenant shall pay any Rental Tax to Landlord in
addition to and at the same time as Base Rent is payable under this Lease, and
shall pay all other Tenant’s Taxes before delinquency (and, at Landlord’s
request, shall furnish Landlord satisfactory evidence thereof). If Landlord
pays Tenant’s Taxes or any portion thereof, Tenant shall reimburse Landlord
within 30 days after receipt of written invoice for the amount of such payment,
together with interest at the Interest Rate from the date of Landlord’s payment
to the date of Tenant’s reimbursement; provided, however, Landlord shall not
pay Tenant’s Taxes prior to delinquency and Landlord shall notify Tenant in
writing ten (10) days in advance of its intent to pay Tenant’s Taxes.


 


9.               UTILITIES AND
SERVICES.


 


9.1 Description of Services. Landlord shall furnish to the
Premises electricity, hot and cold water, passenger and freight elevator
service and heat, ventilation and air conditioning in accordance with the Base
Building description attached as Exhibit F-1. All such services/utilities
shall be separately metered to the Premises, as provided in Section 9.2(b) below,
and Tenant shall pay directly all such costs relating thereto as provided below.
Landlord and Tenant acknowledge and agree that Tenant shall provide and
contract for its own janitorial services to the Premises, at Tenant’s sole cost
and expense, which janitorial services shall be comparable in quality and
services to other janitorial services rendered in other first class office
buildings.


 


9.2 Payment for Additional Utilities and Services.


 


(a) If the temperature otherwise
maintained in any portion of the Premises by the HVAC systems of the Building
is affected as a result of (i) any lights, machines or equipment used by
Tenant in the premises other than reasonable and customary numbers and types of
general office equipment customarily used in the conduct of general office
activities, or (ii) the occupancy of the Premises by more than one person 


 


47

















 


per 150 square feet of rentable area, then Landlord shall have the
right, in consultation with Tenant, to install any machinery or equipment
reasonably necessary to restore the temperature, including modifications to the
standard air-conditioning equipment. The reasonable cost of any such equipment
and modifications, including the reasonable cost of installation and any
additional cost of operation and maintenance of the same, shall be paid by
Tenant to Landlord within thirty (30) days after Landlord’s written request
therefore.


 


(b) As part of the Tenant Improvements,
Tenant shall separately meter or submeter the consumption of all utilities to
the Premises and Tenant hereby agrees to pay, in the case of those utilities
which are separately metered, all utilities charges, as and when due and
payable, to the utility provider and in the case of those utilities which are
separately submetered, to pay to Landlord, when invoiced by Landlord, all
changes associated with such submetered utilities.


 


9.3 Interruption of Services. In the event of an interruption
in, or failure or inability, to provide any of the services or utilities
described in Section 9.1- “Description of Services”
(a “Service Failure”), such Service
Failure shall not regardless of its duration, constitute an eviction of Tenant,
constructive or otherwise, or impose upon Landlord any liability whatsoever,
including, but not limited to, liability of consequential damages or loss of business
by Tenant or, except as provided herein, entitle Tenant to an abatement of rent
or to terminate this Lease.


 


(a) If any Service Failure not caused by
Tenant or its Representatives prevents Tenant from reasonably using a material
portion of the Premises and Tenant in fact ceases to use such portion of the
Premises, Tenant shall be entitled to an abatement of Base Rent and Additional
Rent with respect to the portion of the Premises that Tenant is prevented from
using by reason of such Service Failure in the following circumstances: (i) if
Landlord fails to commence reasonable efforts to remedy the Service Failure
within two (2) Business Days following the occurrence of the Service
Failure or fails thereafter to pursue diligently reasonable action to remedy
the Service Failure, the abatement of rent shall commence the next business day
following the Service Failure and continue for the balance of the period during
with Tenant is so prevented from using such portion of the Premises; and (ii) if
the Service Failure in all events is not remedied within ten (10) days
following the occurrence of the Service Failure and Tenant in fact does not use
such portion of the Premises for an uninterrupted period of ten (10) days
or more by reason of such Service Failure, the abatement of rent shall commence
no later than the eleventh (11th) day following the occurrence of
the Service Failure and continue for the balance of the period during which
Tenant is so prevented from using such portion of the Premises.


 


(b) If a Service Failure is caused by
Tenant or its Representatives, Landlord shall nonetheless remedy the Service
Failure, at the expense of Tenant, pursuant to Landlord’s maintenance and
repair obligations under Section 7- “Maintenance and Repair”
or Section 12.1- “Landlord’s Duty to Repair,”
as the case may be, but Tenant shall not be entitled to an abatement of rent or
to terminate this Lease as a result of any such Service Failure.


 


(c) Notwithstanding Tenant’s entitlement to rent abatement under
the preceding provisions, Tenant shall continue to pay Tenant’s then current
rent until such time as Landlord and Tenant agree on the amount of the rent
abatement, If Landlord and Tenant are unable to agree on the amount of such
abatement within ten (10) Business Days of the date they commence
negotiations regarding the abatement, then either party may submit the matter
to binding arbitration pursuant to sections 1280 et seq. of the California Code
of Civil Procedure.


 


(d) In addition to the foregoing provisions, if there is a Service
Failure not caused by Tenant or its Representatives and such Service Failure
prevents Tenant from conducting its business in the Premises in the manner in
which Tenant intends to conduct such business, and 


 


48

















 


(i) Landlord fails to commence reasonable efforts to remedy the
Service Failure within ten (10) days following the occurrence of the
Service Failure and thereafter use reasonably diligent efforts to remedy the
Service Failure, or (ii) the Service Failure in all events is not
remediated within four (4) months following its occurrence and Tenant in
fact does not substantially conduct its business in the Premises in the manner
in which Tenant intends to conduct business for an uninterrupted period of four
(4) months or more, Tenant shall have the right to terminate this Lease by
written notice delivered to Landlord within ten (10) Business Days
following the event described in clauses (i) or (ii) above giving
rise to the right to terminate.


 


(e) Where the cause of a Service Failure is within the control of
a public utility or other public or quasi-public entity outside Landlord’s
control, written notification to such utility or entity of the Service Failure
and request to remedy the failure shall constitute “reasonable efforts” by
Landlord to remedy the Service Failure.


 


(f) Tenant hereby waives the provisions of California Civil Code Section 1932(1) or
any other applicable existing or future law, ordinance or governmental
regulation permitting the termination of this Lease due to such interruption,
failure or inability.


 


9.4 Tenant’s Access. Landlord shall provide Tenant access to the
vertical and horizontal raceways in the Building to permit Tenant to install
Tenant’s utility and/or telecommunication lines separately or in common with
other building lines. Tenant shall also be permitted reasonable access to roof
of the Building to install, maintain and replace satellite dishes and/or other
telecommunications equipment installed pursuant to Section 37
(Telecommunications Equipment) hereof.


 


10.         EXCULPATION AND
INDEMNIFICATION.


 


10.1                           Landlord’s
Liability to Tenant.  Landlord shall
not be liable to Tenant for any loss, injury or other damage to any person or
property (including Tenant or Tenant’s property) in or about the Premises or
the Property from any cause (including defects in the Property or in any
equipment in the Property; fire, explosion or other casualty; bursting,
rupture, leakage or overflow of any plumbing or other pipes or lines, sprinklers,
tanks, drains, drinking fountains or washstands in, above, or about the
Premises or the Property; or acts of other tenants in the Property), and Tenant
hereby waives all claims against Landlord for any such loss, injury or damage
and the cost and expense of defending against claims relating thereto, except
such loss, injury or damage to the extent caused by Landlord’s negligence or
willful misconduct; provided, however, that Landlord shall indemnify, protect,
defend and hold Tenant harmless from and against any claims, actions,
liabilities, damages, costs or expenses, including reasonable attorneys’ fees
and costs incurred in defending against the same (“Claims”) asserted by third
parties against Tenant for such loss, injury or damages, to the extent the same
are caused by the willful or negligent acts or omissions of Landlord or its
authorized representatives. Notwithstanding any other provision of this Lease
to the contrary, however, in no event shall Landlord be liable to Tenant for
any punitive or consequential damages or damages for loss of business by
Tenant.


 


10.2                           Tenant’s
Indemnification of Landlord.   Tenant shall indemnify, protect, defend and
hold harmless Landlord from and against Claims to the extent arising from (a) the
acts or omissions of Tenant of Tenant’s Representatives or Visitors in or about
the Property, or (b) any construction or other work undertaken by Tenant
on the Premises (including any design defects), or (c) any breach or
default under this Lease by Tenant, excepting only Claims to the extent they
are caused by the negligent or willful acts or omissions of Landlord or its
authorized representatives. Notwithstanding any other provision of this Lease
to the contrary, in no event shall tenant be liable to Landlord for any punitive
or 


 


49

















 


consequential damages, and Tenant and
Landlord agree and understand that Landlord’s remedies set forth in Section 15.2
(Remedies) hereof constitute actual, not consequential, damages.


 


10.3                           Survival.
The obligations of the parties under this Section 10 shall survive the
expiration or termination of this Lease.


 


11                                    INSURANCE


 


11.1                           Tenant’s
Insurance.


 


(a)          Tenant shall maintain in
full force throughout the Term, commercial general liability insurance providing
coverage on an occurrence form basis with limits of not less than Two Million
Dollars ($2,000,000.00) each occurrence for bodily injury and property damage
combined, and Five Million Dollars ($5,000,000.00) annual general aggregate and
Two Million Dollars ($2,000,000.00) products and completed operations annual
aggregate. Tenant’s liability insurance policy or policies shall; (i) include
premises and operations liability coverage, broad form property damage coverage
including completed operations, blanket contractual liability coverage
including, to the maximum extent possible, coverage for the indemnification
obligations of Tenant under this Lease and personal and advertising injury
coverage; (ii) provide that the insurance company pas the duty to defend
all insured’s under the policy; (iii) provide that defense costs are paid
in addition to and do not deplete any of the policy limits; (iv) cover
liabilities arising out of or incurred in connection with Tenant’s use or
occupancy of the Premises or the Property; and (v) extend coverage to
cover liability for the actions of Tenant’s Representatives and Visitors.


 


(b)         Tenant shall at all time
maintain in effect with respect to any Alterations and Tenant’s Trade Fixtures
and personal property, commercial property insurance providing coverage, on an “all
risk” or “special form” basis, in an amount equal to at least 90% of the full
replacement cost of the covered property. Tenant may carry, such insurance
under a blanket policy, provided that such policy provides coverage equivalent
to a separate policy. During the Term, the proceeds from any such policies of
insurance shall be used for the repair or replacement of the Alterations, Trade
Fixtures and personal property so insured. Landlord will have no obligation to
carry insurance on any Alterations or on Tenant’s Trade Fixtures or personal
property.


 


(c)          Each policy of insurance
required under this Section shall: (ii) be maintained at Tenant’s
sole cost and expense, and (iii) require at least thirty (30) days’
written notice to Landlord prior to any cancellation or nonrenewal of insurance
coverage. Insurance companies issuing such policies shall have rating
classifications of “A” or better and financial size category ratings of “X” or
better according to the latest edition of the A.M. Best Key Rating Guide.
All insurance companies issuing such policies shall be license to do business
in the state where the Property is located. Tenant shall provide to Landlord,
upon Landlord’s written request, evidence that the insurance required to be
carried by Tenant pursuant to this Section, is in full force and effect.


 


(d)         [Intentionally Omitted].


 


(e)          Each policy of liability
insurance required by this Section shall: (i) contain a cross
liability endorsement or separation of insured’s clause; (ii) provide that
any waiver of subrogation rights or release prior to a loss does not void
coverage; and (iii) provide that it is primary to and not contributing
with, any policy of insurance carried by Landlord covering the same loss.


 


(f)            Prior to occupancy of
the Premises by Tenant, and not less than thirty (30) days prior to expiration
of any policy thereafter, Tenant shall furnish to 


 


50

















 


Landlord a certificate of insurance reflecting
that the insurance required by this Section is in force.


 


(g)         All or any portion of the
insurance coverages Tenant is required to maintain under this Lease may be
maintained under a program of Tenant self-insurance or under policies that
include self-insurance retentions or deductibles larger than those typically
carried by similarly situated tenants. Before the Commencement Date, Tenant
shall advise Landlord of the self-insurance program, specifying limits and
amounts of umbrella coverage and self-insured retentions, or deductibles.
Landlord is considered to consent to such self-insurance program as long as it
is effective and Tenant’s net worth and current assets exceed $250,000,000 and
$250,000,000 respectively.


 


11.2                           Landlord’s
Insurance. At all times during the Term, Landlord shall maintain in effect
insurance on the Building with responsible insurers, on an “all risk” or “special
form” basis, insuring the Building and the Tenant Improvements in an amount
equal to at least 90% of the replacement cost thereof, excluding land,
foundations, footings and underground installations, together with insurance
against sprinkler damager, vandalism and malicious mischief. In addition,
Landlord shall maintain during the Term of this Lease commercial general liability
insurance on an occurrence form basis with limits of Two Million Dollars
($2,000,000.00) each occurrence for bodily injury and property damage combined
and Three Million Dollars ($3,000,000.00) annual general aggregate. The
insurers shall be authorized to do business in the State of California and the
policies of insurance with respect to property loss or damage by fire or other
casualty shall contain a waiver or subrogation. Landlord may, but shall not be
obligated to, carry insurance against additional perils and/or in greater
amounts.


 


11.3                           Property
Insurance-Waiver of Subrogation. Landlord and Tenant each hereby waive any
right of recovery against the other and the partners, members, shareholders,
officers, directors and authorized representatives of the other for any loss or
damage that is covered by any policy of property insurance maintained by either
party (or required by this Lease to be maintained) with respect to the Premises
or the Property or any operation therein. If any such policy of insurance
relating to this Lease or to the Premises or the Property does not permit the
foregoing waiver or if the coverage under any such policy would be invalidated
as a result of such waiver, the party maintaining such policy shall obtain from
the insurer under such policy a waiver of all rights of recovery, by way of
subrogation against either party in connection with any claim, loss or damage
covered by such policy.


 


12.         DAMAGE OR DESTRUCTION.


 


12.1 Landlord’s Duty to Repair.


 


(a) If all or a substantial part of the
Premises are rendered untenantable or inaccessible by damage to all or any part
of the Property from fire or other casualty then, unless either party is
entitled to and elect to terminate this Lease pursuant to Sections 12.1-
Landlord’s Right to Terminate and 12.3- Tenant’s Right to Terminate. Landlord
shall, at its expense, use reasonable efforts to repair and restore the
Premises and/or the Property, as the case may be, to substantially their former
condition to the extent permitted by then applicable Laws; provided, however,
that in no event shall Landlord have any obligation for repair or restoration
beyond the extent of insurance process payable to Landlord for such repair or
restoration, or for any of Tenant’s personal property, Trade Fixtures or
Alterations.


 


(b) If Landlord is required or elects to
repair damage to the Premises and/or the Property, this Lease shall continue in
effect, but Tenant’s Base Rent and Additional Rent from the date of this
casualty through the date of substantial completion of the repair shall be
abated with regard to any portion of the Premises that Tenant is prevented from
using by 


 


51

















 


reason of such damage or its repair. In no event shall Landlord be
liable to Tenant by reason of any injury to or interference with Tenant’s
business or property arising form fire or other casualty or by reason of any
repairs to any part of the Property necessitated by such casualty.


 


12.2 Landlord’s Right to Terminate. Landlord may elect to
terminate this Lease following damage by fire or other casualty under the
following circumstances:


 


(a) If, in the reasonable judgment of
Landlord, the Premises and the Property cannot be substantially repaired and
restored under applicable Laws or as a result of a dispute with Landlord’s
insurer or Mortgagee within one (1) year from the date of the casualty;


 


(b) If the Building is damaged or
destroyed to the extent that, in the reasonable judgment of Landlord, the cost
to repair and restore the Building would exceed twenty-five percent (25%) of
the full replacement cost of the Building, whether or not the premises are at
all damaged or destroyed; or


 


(c) If the fire or other casualty occurs
during the last year of the Term or, if an Extension Option has been exercised,
during the last year of the applicable Extension Period.


 


If any of the circumstances described in subparagraphs (a), (b) or
(c) of this Section 12.2 occur or arise, Landlord shall notify Tenant
in writing of that fact within ninety (90) days after the date of the casualty
(such 90 day period plus any applicable 30 day period set forth in Section 12.3(b) hereof
shall be referred to herein as the “Lease Status Period”) and in such notice
Landlord shall also advise Tenant whether Landlord has elected to terminate
this Lease as provided above. Landlord may elect to terminate this Lease in
accordance with this Section 12.2 to the extent it also terminates all
other lease within the Building. If other buildings in the Project are
similarly damaged and destroyed at the same time that the Building is damaged
and destroyed and Landlord owns and controls suck other buildings, then
Landlord may elect to terminate this Lease (i) only to the extern it also
terminates the leases in such other building(s), and (ii) if Tenant lease
space in such other building(s), Landlord also terminates such other lease(s).


 


12.3 Tenant’s Right to Terminate. If all or a substantial part
of the Premises are rendered untenantable or inaccessible by damage to all or
any part of the Property from fire or other casualty, then Tenant may elect to
terminate this Lease under the following circumstances:


 


(a) Where Landlord either (i) fails
to apply for any permits required for such repair and restoration within thirty
(30) days following the expiration of the Lease Status Period (without either
party, terminating this Lease) or Landlord thereafter fails to proceed to
diligently pursue reasonable efforts to obtain such perm its, or (ii) has
failed to commence such repair or restoration within thirty (30) days after
issuance of required permits and approvals or, in any case, one hundred fifty
(150) days after the damage or destruction, or (iii) has so commenced such
repair or restoration and thereafter fails to diligently pursue reasonable
efforts to complete such repair or restoration, which failure has continued for
a continuous period of at least thirty (30) days or the aggregate of such
failures exceed thirty (30) business days; provided, however, that if Landlord
shall be delayed in pursing and completing such repair or restoration by reason
of any Force Majeure Events, then such one hundred fifty (150) and thirty (30)
day periods shall be extended for the period of time (not to exceed in the
aggregate three hundred (300) days) equal to the period of the delay. In such
an event, Tenant may elect to terminate this Lease by notice given to Landlord
within twenty (20) Business Days after such one hundred fifty (150) or thirty
(30) day periods as such periods may have been extended pursuant to the
preceding sentence, effective as of the end of the next calendar month after
Landlord’s receipt of such notice.


 


(b) In the circumstance described in
Subsections 12.2(a), (b), and (c) above; in which event Tenant may elect
to terminate this Lease by giving Landlord notice of such election to terminate
within thirty (30) days after Landlord’s notice to Tenant pursuant to Section 12.2-Landlord’s Right to Terminate.


 


52
















 


12.4 Waiver. Landlord and Tenant each hereby waive the
provisions of California Civil Code Sections 1932(2), 1933(4) and any
other applicable existing or future Law permitting the termination of a lease
agreement in the event of damage or destruction under any circumstances other
than as provided in Sections 12.2-Landlord’s Right to
Terminate and 12.3- Tenant’s Right to
Terminate.


 


13. CONDEMNATION.


 


13.1 (a) “Award”
shall mean all compensation, sums, or anything of value awarded, paid or
received on a total or partial Condemnation.


 


(b) “Condemnation”
shall mean (i) a permanent taking (or a temporary taking for a period
extending beyond the end of the Term) pursuant to the exercise of the power of
condemnation or eminent domain by any public or quasi-public authority, private
corporation or individual having such power (“Condemner”), whether by legal
proceedings or otherwise, or (ii) a voluntary sale or transfer by Landlord
to any such authority, either under threat of condemnation or while legal
proceedings for condemnation are pending.


 


(c) “Date of
Condemnation” shall mean the earlier of the date that title to the
property, taken is vested in the Condemner or the date the Condemner has the
right to possession of the property being condemned.


 


13.2 Effect on Lease.


 


(a) If the Premises are totally taken by
Condemnation, this Lease shall terminate as of the Date of Condemnation. If a
portion but not all of the Premises is taken by Condemnation, this Lease shall
remain in effect; provided, however, that if the portion of the Premises
remaining after the Condemnation will be unsuitable for Tenant’s continued use,
then upon notice to Landlord within thirty (30) days after Landlord notifies
Tenant of the Condemnation, Tenant may terminate this Lease effective as of the
Date of Condemnation.


 


(b) If twenty-five percent (25%) or more
of the Land or of the floor area in the Building is taken by Condemnation, or
if as a result of any Condemnation the Building is no longer reasonably
suitable for use as an office building, whether or not any portion of the
Premises is taken, Landlord may elect to terminate this Lease, effective as of
the Date of Condemnation, by notice to Tenant within thirty (30) days after the
Date of Condemnation.


 


(c) If all or a portion of the Premises
is temporarily taken by a Condemner for a period not extending beyond the end
of the Term or exceeding 180 days, this Lease shall remain in full force and
effect.


 


13.3 Restoration. If this Lease is not terminated as provided in
Section 13.2- Effect on Lease, Landlord, at its expense, shall diligently
proceed to repair and resolve the Premises to substantially its former
condition (to the extent permitted by then applicable Laws) and/or repair and
restore the Building to an architecturally complete office building; provided,
however, that Landlord’s obligation to so repair and restore shall be limited
to the amount of any Award paid to Landlord and not required to be paid to any
Mortgagee (as defined in Section 20.2 below). In no event shall Landlord
have any obligation to repair or replace any improvements in the Premises
beyond the amount of any Award paid to Landlord for such repair or to repair or
replace any of Tenant’s personal property, Trade Fixtures, or Alterations.


 


13.4 Abatement and Reduction of Rent. If any portion of the
Premises is taken in a Condemnation or is rendered permanently untenantable by
repairs necessitated by the Condemnation, and this Lease is not terminated, the
Base Rent and Additional Rent payable under this Lease shall be proportionally
reduced as of the Date of Condemnation based upon the percentage of rentable
square feet in the Premises so taken or rendered permanently untenantable. In
addition, if this Lease remains in effect following a Condemnation and Landlord
proceeds to repair and restore the Premises, the Base Rent and Additional Rent
payable under this Lease shall be abated during the period of such repair or
restoration to the extent such repairs prevent Tenant’s use of the Premises.


 


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13.5 Awards. Any Award made shall be paid to Landlord, and
Tenant hereby assigns to Landlord, and waives all interest in or claim to, any
such Award, including any claim for the value of the unexpired Term; provided,
however, that Tenant shall be entitled to receive, or to prosecute a separate
claim for, an Award for a temporary taking of the Premises or a portion thereof
by a Condemner where this Lease is not terminated (to the extent such Award
relates to the unexpired Term), or an Award or portion thereof separately
designated for relocation expenses or the interruption of or damage to Tenant’s
business or as compensation for Tenant’s personal property, Trade Fixtures or
Alterations.


 


13.6 Waiver. Landlord and Tenant each hereby waive the provisions of
California Code of Civil Procedure Section 1265.130 and any other
applicable existing or future Laws allowing either party to petition for a
termination of this Lease upon a partial taking of the Premises and/or the
Property.


 


14. ASSIGNMENT AND SUBLETTING.


 


14.1       Landlord’s Consent
Required. Tenant shall not assign, mortgage, pledge, hypothecate or
encumber this Lease or any interest therein, or sublet or license, or in any
other manner transfer all or any part of Tenant’s interest under this Lease
(each and all a “Transfer”), without the prior written consent of Landlord,
which (subject to the other provisions of this Section 14) shall not be
unreasonably withheld, conditioned or delayed. If Tenant is a non-publicly
traded corporation, any sale or other transfer, including any consolidation,
merger or reorganizations, of the majority of the voting stock of Tenant issued
and outstanding at any given time during the Term of this Lease or any sale or
other transfer of a majority of the partnership interest in Tenant, if Tenant
is a partnership, shall constitute an assignment for purposes of this Lease.
Notwithstanding anything to the contrary contained in this Lease, Tenant may
assign this Lease or may sublet the Premises without Landlord’s consent for any
use permitted under this Lease, without Landlord’s consent, to any corporation
or other entity which controls, is controlled by, or is under common control
with Tenant, or to any corporation or other entity resulting from a merger,
reorganization or consolidation with Tenant, or to any person or entity which
acquires controlling interest in Tenant’s stock or substantially all of the
assets of Tenant as going concern (collectively, an “Affiliate”), provided that
the Affiliate assumes in writing all of Tenant’s obligations under this Lease
and that Tenant gives Landlord such reasonable information as Landlord shall
reasonably request regarding the Affiliate. Notwithstanding any provision in
this Lease to the contrary, Tenant shall not mortgage, pledge, hypothecate or
otherwise encumber all or any portion of Tenant’s interest under this Lease.


 


14.2       Reasonable Consent.


 


(a)          If Tenant complies with
the following conditions, Landlord shall not unreasonably withhold its consent
to the subletting of the Premises or any portion thereof or the assignment of
this Lease. Prior to any proposed Transfer, Tenant shall submit in writing to
Landlord (i) the name and legal composition of the proposed assignee,
subtenant, user or other transferee (each a “Transferee”); (ii) the nature
of the business proposed to be carried on in the Premises; (iii) a current
balance sheet, income statements for the last two years and such other
reasonable financial and other publicly available information concerning the
proposed Transferee as Landlord may reasonably request; and (iv) a copy of
the proposed assignment, sublease or other agreement governing the proposed
Transfer. Within ten (10) days after Landlord receives all such
information it shall notify Tenant whether it approves or disapproves such
Transfer.


 


(b)         The parties hereto agree
and acknowledge that, among other circumstances for which Landlord could
reasonably withhold consent to a proposed Transfer, it shall be reasonable for
Landlord to withhold consent where (i) the proposed Transferee does 


 


54

















 


not intent itself to occupy the entire
portion of the Premises assigned or sublet, (ii) Landlord reasonably
disapproves of the character of the business to be conducted by the Transferee
at the Premises, or (iii) the Transferee is a governmental agency or unit
or an existing tenant in the project (unless such existing tenant’s space needs
cannot be accommodated in the Project, which case Tenant may sublease to such
existing tenant, subject to the other terms and conditions of this Lease).
Landlord and Tenant agree that Tenant may utilize the services or brokers to
sublease or assign under this Lease.


 


14.3       Excess Consideration.
If Landlord consents to the Transfer, Tenant shall pay to Landlord as
additional rent, within thirty (30) days after receipt by Tenant, fifty percent
(50%) of any net consideration paid by the Transferee for the Transfer,
including, in the case of a sublease, the excess of the rent and other consideration
payable by the subtenant over the amount of Base Rent and Additional Rent
payable hereunder applicable to the subleased space after reimbursement to
Tenant of all costs of the Transfer, including, but not limited to, brokerage
commissions, the cost of any improvements made in connection with the Transfer,
and attorneys’’ fees. All costs paid by Tenant in connection with the Transfer
shall be deducted as of the effective date of the Transfer.


 


14.4       No Release Of Tenant.
No consent by Landlord to any Transfer shall relieve Tenant of any obligation
to be performed by Tenant under this Lease, whether occurring before or after
such consent, assignment, subletting or other Transfer. Each Transferee shall
be jointly and severally liable with Tenant (and Tenant shall be jointly and
severally liable with each Transferee) for the payment of rent (or, in the case
of all sublease, rent in the amount set forth in the Sublease) and for the
performance of all other terms and provisions of this Lease applicable to the space
transferred. The consent by Landlord to any Transfer shall not relieve Tenant
or any such Transferee from the obligation to obtain Landlord’s express prior
written consent to any subsequent Transfer by Tenant or any Transferee. The
acceptance of rent by Landlord from any other person shall not be deemed to be
a waiver by Landlord of any provision of this Lease or to be consent to any
Transfer.


 


14.5       Expenses and Attorneys
Fees. Tenant shall pay to Landlord within 30 days after receipt of written
invoice all actual third-party costs and expenses (including reasonable
attorneys’ fees) incurred by Landlord in connection with reviewing or
consenting to any proposed Transfer (including any request for consent to, or
any waiver of Landlord’s rights in connection with, any security interest in
any of Tenant’s property that the Premises) not to exceed one thousand dollars
($1,000.00).


 


14.6       Effectiveness of
Transfer. Prior to the date on which any permitted Transfer (whether or not
requiring Landlord’s consent) becomes effective, Tenant shall deliver to
Landlord a counterpart of the fully executed Transfer document and Landlord’s
standard form of Consent to Assignment or Consent to Sublease executed by
Tenant and the Transferee in which each of Tenant and the Transferee confirms
its obligations pursuant to this Lease. Failure or refusal of a Transferee to
execute any such instrument shall not release or discharge the Transferee from
liability as provided herein. The voluntary, involuntary or other surrender of this
Lease by Tenant, or a mutual cancellation by Landlord and Tenant, shall not
work a merger, and any such surrender or cancellation shall, at the option of
Landlord, either terminated all or any existing sublease or operate as an
assignment to Landlord of any or all of such subleases.


 


14.7       Landlord’s Rights to
Terminate. Notwithstanding any of the above provisions of this Section to
the contrary, if Tenant notifies Landlord that it desires to enter into a
Transfer and if such Transfer (taken separately or in conjunction with previous
Transfers) involve either (i) an assignment of the Lease or (ii) a
sublease of all the Premises or a Material Portion of the Premises for all or
substantially all of the remaining Term of this Lease, then Landlord, in lieu
of consenting to such Transfer may elect (x) in the case of an assignment
or a sublease of the entire Premises to terminate this Lease, or (y) in
the case of a sublease of 


 


55

















 


less than the entire Premises, to terminate
this Lease as it relates to the space proposed to be subleased by Tenant. In
such event, this Lease will terminate (or the space proposed to be subleased
will be removed from the Premises subject to other terms of this Lease) and the
Base Rent and Tenant’s Share under this Lease shall be proportionately reduced
on the date the Transfer was proposed to be effective, and the Landlord may
lease such space to any party, including the prospective Transferee identified
by Tenant. The term “Material Portion” shall mean fifty percent (50%) of the
then current Premises leased by Tenant hereunder, either individually or when
taken together with previous sublet proportions of the Premises during the
initial Term of this Lease, and any portion of the then current Premises during
any Extension Term, Landlord shall reimburse Tenant for all reasonable,
out-out-pockets costs of Tenant related to any proposed Transfer if Landlord
elects to recapture such space. Landlord’s recapture right shall not apply to
any assignments or subleases to an Affiliate of Tenant.


 


14.8       Assignment of Sublease
Rights. Tenant hereby absolutely and irrevocably assigns to Landlord any
and all rights to receive rent and other consideration from any sublease and
agrees that Landlord, as assignee or as attorney-in-fact for Tenant for
purposes hereof, or a receiver for Tenant appointed on Landlord’s application
may (but shall not be obligated to) collect such rents and other consideration
and apply the same toward Tenant’s obligations to Landlord under this Lease;
provided, however, that Landlord grants to Tenant at all times prior to
occurrence of any Event of Default by Tenant a revocable license to collect
such rents (which license shall automatically and without notice be and be
deemed to have been revoked and terminated immediately upon any Event of
Default).


 


15.         DEFAULT AND REMEDIES.


 


15.1 Events of Default. The occurrence of any of the following
shall constitute an “event of Default” by Tenant if remaining uncured after the
expiration of any applicable cure periods:


 


(a) Tenant fails to make any regularly scheduled payment of rent
when due if payment in full is not received by Landlord within five (5) days
after written notice that it is due. With respect to any non regularly
scheduled payment of Rent, if Tenant fails to make any payment of such rent
within thirty (30) days after written notice to Tenant.


 


(b) Tenant violates the restrictions on Transfer set forth in Section 14-Assignment and Subletting.


 


(c) Tenant ceases doing business as a going concern; makes an
assignment for the benefit of creditors; is adjudicated an insolvent, files a
petition (or files an answer admitting the material allegations of a petition)
seeking relief under any under any state or federal bankruptcy or other statute,
law or regulation affecting the creditors’ rights; all or substantially all of
Tenant’s assets are subject to judicial seizure or attachment and are not
released within 30 days, or Tenant consents to or acquiesces in the appointment
of a trustee, receiver or liquidator for Tenant or for all or any substantial
part of Tenant’s assets.


 


(d) Tenant fails, within ninety (90) days after the commencement
of any proceedings against Tenant seeking relief under any state or federal
bankruptcy or other statue, law or regulation affecting creditors’ rights, to
have such proceedings dismissed, or Tenant fails, within ninety (90) days after
an appointment, without Tenant’s consent or acquiescence, of any trustee,
receiver or liquidator for Tenant or for all or any substantial part of Tenant’s
assets, to have such appointment vacated.


 


(e) Tenant fails to perform or comply with any provision of this
Lease other than those described in (a) through (d) above, and does
not fully cure such failure within thirty (30) days after notice to Tenant or,
if such failure cannot be cured within such thirty (30)-day period, Tenant
fails within such thirty (30)-day period to commence, and thereafter diligently
proceed with, all actions necessary to cure such failure as soon as reasonably
possible.


 


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15.2 Remedies. Upon the occurrence of an Event of Default,
Landlord shall have the following remedies, which shall not be exclusive bust
shall be cumulative and shall be in addition to any other remedies now or
hereafter allowed by law:


 


(a) Landlord may terminate Tenant’s right to possession of the
premises at any time by written notice to Tenant. Tenant expressly acknowledges
that in the absence of such written notice from Landlord, no other act of
Landlord, including reentry into the Premises, efforts to relet the Premise,
reletting of the Premises for Tenant’s account, storage of Tenant’s personal
property and Trade Fixtures, acceptance of keys to the Premises from Tenant or
exercise of any other rights and remedies under this Section, shall constitute
an acceptance of Tenant’s surrender of the Premises or constitute a terminating
on this Lease or of the Tenant’s right to possession of the Premises. Upon such
termination in writing of Tenant’s right to possession of the Premises, as
herein provided, this Lease shall terminate and Landlord shall be entitled to
recover damages from Tenant as provided in California Civil Code Section 1951.2
and any other applicable existing or future Law providing for recovery of
damages for such breach, including the worth at the time of award of the amount
by which the rent which would be payable by Tenant hereunder for the remainder
of the Term after the date of the award of damages, including Additional Rent
as reasonably estimated by Landlord, exceeds the amount of such rental loss as
Tenant proves could have been reasonably avoided, discounted at the discount
rate published by the Federal Reserve Bank of San Francisco for member banks at
the time of the award plus one percent (1%).


 


(b) Landlord shall have the remedy described in California Civil
Code Section 1951.4 (Landlord may continue this Lease in effect after
Tenant’s breach and abandonment and recover rent as it becomes due, if Tenant
has the right to sublet or assign, subject only to reasonable limitations).


 


(c) Landlord may cure the Event of Default as Tenant’s expense. If
Landlord pays any sum or incurs any expense in curing the Event of Default,
Tenant shall reimburse Landlord upon demand for the amount of such payment or
expense with interest at the Interest Rate from the date the sum I paid or the
expense is incurred until Landlord is reimbursed by Tenant.


 


(d) Landlord may remove all Tenants’ property from the Premises,
and such property may be stored by Landlord in a public warehouse or elsewhere
at the sole cost and for the account of Tenant. If Landlord does not elect to
store any or all of Tenant’s property left in the Premises, Landlord may
consider such property, to be abandoned by Tenant, and Landlord may thereupon
dispose of such property in any manner deemed appropriate by Landlord. Any
proceeds realized by Landlord on the disposal of any such property shall be
applied first to offset all expenses of storage and sale, then credited against
Tenant’s outstanding obligations to Landlord under this Lease, and any balance
remaining after satisfaction of all obligations of Tenant under this Lease
shall be delivered to Tenant.


 


16.         LATE CHARGE AND INTEREST.


 


16.1 Late Charge. If any payment of rent is not received by
Landlord within five (5) days after written notice that such amount was
due, Tenant shall pay to Landlord on demand as a late charge an additional
amount equal to two percent (2%) of the overdue payment. A late charge shall
not be imposed more than once on any particular installment not paid when due,
but imposition of a late charge on any payment not maid when due does not
eliminate or supersede late charges imposed on other (prior) payments not made
when due or preclude imposition of a late charge on other installments or
payments not made when due. The foregoing notwithstanding, a late charge shall
not be imposed on the first two late payments made in any twelve (12) month
period commencing with the Commencement Date of this Lease.


 


16.2 Interest. In addition to the late charges referred to
above, which are intended to defray Landlord’s costs resulting from late
payments, any payment due Tenant or Landlord not paid within five (5) days
after it was due shall bear interest from the date due until paid at the Prime
Rate plus 2% (as published by the Bank of America, San Francisco, or its
successor) per 


 


57

















 


annum or the maximum lawful rate under applicable laws, whichever is
less (the “Interest Rate”). Acceptance of any late charge and/or interest shall
not constitute a waiver of Tenant’s or Landlord’s default with respect to the
overdue sum or prevent Tenant or Landlord from exercising any of its other
rights and remedies under this Lease.


 


17.         WAIVER. No provisions of
this Lease shall be deemed waived by Landlord or Tenant unless such waiver is
in a writing signed by such party. The waiver by such party of any breach of
any provision of this Lease shall not be deemed a waiver of such provision or
of any subsequent breach of the same or any other provision of this Lease. No
delay pr omission on the exercise of any right or remedy upon any default shall
impair such right or remedy or be constructed as a waiver. Landlord’s
acceptance of any payments of rent due under this Lease shall not be deemed a
waiver of any default by Tenant under this Lease (including Tenant’s recurrent
failure to timely pay rent) other than Tenant’s nonpayment of the accepted
sums, and no endorsement or statement on any other check or accompanying any
check or payment shall be deemed an accord and satisfaction. Landlord’s consent
to or approval of any act by Tenant requiring Landlord’s consent or approval
shall not be deemed to waive or render unnecessary Landlord’s consent to or
approval of any subsequent act by Tenant.


 


18.         ENTRY, INSPECTION AND
CLOSURE. Upon not less than two (2) Business Days’ prior written notice to
Tenant (and without notice in emergencies), Landlord and its authorized
representatives may enter the Premises at all reasonable times to determine
whether the Premises are in good condition, to determine whether Tenant is
complying with its obligations under this Lease, to perform any maintenance or
repair of the Premises or the Building that Landlord has the right or
obligation to perform, to install or repair improvements for other tenants
where access to the Premises is required for such installation or repair, to
serve, post or keep posted any notices required or allowed under the provisions
of this Lease and, at any time during the Term, to show the Premises to
prospective brokers, agents, buyers, transferees, Mortgagees or, during the
last twelve (12) months of the Term, to show the Premises to prospective
tenants, or to do any other act or thing necessary for the safety or
preservation of the Premises or the Building. When reasonably necessary
Landlord may temporarily close entrances, doors, corridors, elevators or other
facilities in the Building without liability to Tenant by reason of such closure.
Subject to the other terms of this Lease, Tenant shall have the right to have
any agents or contractors of Landlord escorted by a representative of Tenant at
all times. Landlord shall conduct its activities under this Section in a
manner that will minimize inconvience to Tenant without unreasonable additional
expense to Landlord. In no event shall Tenant be entitled to an abatement of
rent on account of any entry by Landlord, and Landlord shall not be liable in
any manner for any inconvience, loss of business or other damage to Tenant or
other persons arising out of Landlord’s entry, on the Premises in accordance
with this Section. No action by Landlord pursuant to this paragraph shall
constitute an eviction of Tenant, constructive or otherwise, entitle Tenant to
an abatement of rent or to terminate this Lease or otherwise releases Tenant
from any of Tenant’s obligations under this Lease.


 


58

















 


19.         SURRENDER AND HOLDING
OVER.


 


19.1 Surrender. Upon the expiration or termination of this
Lease, Tenant shall surrender the Premises and all Tenant Improvements and
Alterations to Landlord broom clean and in their original condition, except for
reasonable wear and tear, damage from casualty or condemnation and any changes
resulting from approved Alterations; provided, however, that Tenant shall
remove from the Premises all Tenant’s personal property, Trade Fixtures and
Alterations that Tenant has the right or is required by Landlord to remove
under the provisions of this Lease, and repair any damage caused by such
removal. If such removal is not completed before the expiration or termination
of the Term, Landlord shall have the right (but no obligation) to remove the
same, and Tenant shall pay Landlord within thirty (30) receipt of a written
invoice for all costs of removal and storage thereof. Landlord shall also have
the right to retain or dispose of all or any portion of such property if Tenant
does not pay all such costs and retrieve the property within ten (10) days
after notice from Landlord (in which event title to all such property described
in Landlord’s notice shall be transferred to and vest in Landlord). Tenant
waives all Claims against Landlord for any damage or loss to Tenant resulting
from Landlord’s removal, storage, retention, or disposition of any such
property. Upon expiration or termination of this Lease or of Tenant’s
possession, whichever is earliest, Tenant shall surrender all keys to the
Premises or any other part of the Building and shall deliver to Landlord all
keys for or make known to Landlord the combination of locks on all safes,
cabinets and vaults that may be located in the Premises. Tenant’s obligations
under this Section shall survive the expiration or termination of this
Lease.


 


19.2 Holding Over. If Tenant (directly or through any Transferee
or other successor-in-interest of Tenant) remains in possession of the Premises
after the expiration or termination of this Lease, Tenant’s continued
possession shall be on the basis of a tenancy at the sufferance of Landlord. In
such event, Tenant shall continue to comply with or perform all of the terms
and obligations of Tenant under this Lease, expect that the monthly Base Rent
during Tenant’s holding over shall be one hundred thirty-five percent (135%) of
the Base Rent payable in the last full month prior to the termination hereof
for the first four months following the expiration of the Term and thereafter,
one hundred fifty percent (150%) of the Base Rent payable in the last full
month prior to the termination hereof. Acceptance by Landlord of rent after
such termination shall not constitute a renewal of this Lease; and nothing
contained in this provision shall be deemed to waive Landlord’s right of
re-entry or any other right hereunder or at law. Tenant shall indemnify, defend
and hold Landlord harmless from and against all Claims arising or resulting
directly or indirectly from Tenant’s failure to timely surrender the Premises,
including (i) any rent payable by or any loss, cost, or damages claimed by
any prospective tenant of the Premises, and (ii) Landlord’s damages as a
result of such prospective tenant rescinding or refusing to enter into the
prospective lease of the Premises by reason of such failure to timely surrender
the Premises.


 


20.         ENCUMBRANCES.


 


20.1 Subordination. This Lease is expressly made subject and
subordinate to any mortgage, deed of trust, ground lease, underlying lease pr
like encumbrance affecting any part of the Property or any interest of Landlord
therein which is now existing or hereafter executed or recorded (“Encumbrance”).
The foregoing notwithstanding, however, as to current and future Encumbrances,
Landlord shall obtain from the holder of any Encumbrance a subordination,
non-disturbance and attornment agreement, reasonably acceptable to Tenant,
which shall provide that the holder of the Encumbrance agrees that this Lease
shall survive the termination of the Encumbrance by lapse of time, foreclosure
or otherwise so long as Tenant is not in default under this Lease after the
expiration of any applicable cure period and pursuant to which Tenant shall
agree to attorn to such holder of the Encumbrance. Provided that the holder of
the Encumbrance provides Tenant with a non-disturbance agreement as provided in
the preceding sentence, Tenant shall execute and deliver to Landlord, within
twenty (20) days after written 


 


59

















 


request therefore by Landlord and in a form reasonably requested by
Landlord, any additional documents evidencing the subordination of this Lease
with respect to any such Encumbrance and the non-disturbance agreement of the
holder of any such Encumbrance. If the interest of Landlord in the Property is
transferred pursuant to or in lieu of proceedings for enforcement of any
Encumbrance, Tenant shall immediately and automatically attorn to the new
owner, and this Lease shall continue in full force and effect as a direct lease
between the transferee and Tenant on the terms and conditions set forth in this
Lease.


 


20.2 Mortgagee Protection. Tenant agrees to give any holder of
any Encumbrance covering any part of the Property (“Mortgagee”), by registered
mail, a copy of any notice of default served upon Landlord, provided that prior
to such notice Tenant has been notified in writing (by way of notice of
assignment of rents and leases, or otherwise) of the address of such Mortgagee.
If Landlord shall have failed to cure such default within thirty (30) days from
the effective date of such notice of default, then the Mortgagee shall have an
additional thirty (30) days within which to cure such default of if such
default cannot be cured within that time, then such additional time as may be
necessary to cure such default (including the time necessary to gain possession
of the Property if necessary to effect such cure and if the default does not
materially and adversely affect Tenant’s tendency), and this Lease shall not be
terminated so long as such remedies are being diligently pursued.


 


21. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.


 


21.1 Within
twenty (20) days after written request therefore, Tenant shall execute and
deliver to Landlord, a certificate stating that to Tenant’s actual knowledge as
of the date of the certificate, this Lease is in full force and effect, describing
any amendments or modifications hereto, acknowledging that this Lease is
subordinate or prior, as the case may be, to any Encumbrance and stating any
other information regarding the status of the Lease Landlord may reasonably
request, including the Term, the monthly Base Rent, the date to which Rent has
been paid, the amount of any security deposit or prepaid rent, whether to the
best of the Tenant’s knowledge, Landlord is in default under the terms of the
Lease, and whether Landlord has completed its construction obligations
hereunder (if any). Any person or entity purchasing, acquiring an interest in
or extending in financing with respect to the Property shall be entitled to
rely upon any such certificate. If Tenant fails to deliver such certificate
within ten (10) days after Landlord’s second written request therefore,
Tenant shall be deemed to have approved and shall be bound by such estoppels
certificate.


 


21.2 Within ten (10) days after written request therefore, but no
more than once a year, Tenant shall deliver to Landlord a copy of the financial
statements (including at least a year end balance sheet and a statement of
profit and loss) of Tenant for each of the three most recently completed years,
prepared in accordance with generally accepted accounting principles (and, if
such is Tenant’s normal practice, audited by an independent certified public
accountant), all then available subsequent interim statements, and such other
financial information as may reasonably be requested by Landlord or required by
any Mortgagee. Notwithstanding the foregoing, Landlord hereby waives the right
to request such financial statements so long as the named tenant under this
lease is a public corporation whose shares are traded on a nationally
recognized stock market or exchange.


 


22.         NOTICES. Any notice,
demand, request, consent or approval that either party desires or is required
to give to the other party under this lease shall b in writing and shall be
served personally, delivered by messenger or courier service or sent by U.S.
certified mail, return receipt requested, postage prepaid, addressed to the
other party at the party’s address for notices set forth in the Basic Lease
Information. Notices delivered personally will be effective immediately 


 


60

















 


upon receipt (or refusal of delivery or
receipt); notices sent by independent messenger or courier service will be
effective one (1) day after acceptance by the independent service for
delivery; notices sent by mail in accordance with this Section will be
effective three (3) days after mailing. Either party may change its
address for notices hereunder by a notice to the other party, complying with
this Section. If Tenant sublets the Premises, notices from Landlord shall be
effective on the subtenant when given to Tenant pursuant to this Section.


 


23.         ATTORNEYS’ FEES.


 


23.1 Prevailing Party. In the event of any litigation or
arbitration regarding any rights and obligations under this Lease, the
prevailing party shall be entitled to recover reasonable attorneys’ fees, and
court costs in addition to any other relief, which may be granted. The “prevailing
party” shall mean the party receiving substantially the relief desired, whether
by settlement, dismissal, summary, judgment, or otherwise.


 


23.2 Other Litigation. If Landlord, without fault on Landlord’s
part, is made a party to any litigation instituted by Tenant or by any third
party against Tenant, or by or against any Transferee or other occupant of the
Premises or otherwise arising out of or resulting from any act or transaction
of Tenant or of any such Transferee or occupant, Tenant shall hold Landlord
harmless from any judgment rendered against Landlord or the Premises or any
part thereof, and reimburse Landlord upon demand for all costs and expenses,
including reasonable attorneys’ fees, incurred by Landlord in or in connection
with such litigation.


 


24.         QUIET POSSESSION. Subject
to Tenant’s full and timely performance of all of Tenant’s obligations under
this Lease and subject to terms of this Lease, including Section 20-Emcumbrances, Tenant shall have the quiet possession of the
Premises throughout the Term as against any personas or entities lawfully
claiming by, through or under Landlord.


 


25.         SECURITY MEASURES [INTENTIONALLY
OMITTED]


 


26.         FORCE MAJEURE. If
Landlord is delayed, interrupted or prevented from performing any of its
obligations under this Lease, including its obligations under the Work Letter
(if any), and such delay, interruption or prevention is due to fire, act of
God, governmental act or failure to act, unavailability of materials or any
cause outside the reasonable control of Landlord, then the time for performance
of the affected obligations of Landlord shall be extended for a period
equivalent to the period of such delay, interruption or prevention.


 


27.         RULES AND REGULATIONS.
Tenant shall be bound by and shall comply with the rules and regulations
attached to and made a part of this Lease as Exhibit C to the extent those
rules and regulations are not in conflict with the terms of this Lease, as
well as any reasonable rules and regulations hereafter adopted by Landlord
for all tenants of the Building, upon notice to Tenant thereof (collectively,
the “Building Rules”). Landlord shall not be
responsible to Tenant or to any other person for any violation of, or failure
to observe, the Building Rules by any other tenant or other person.


 


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Landlord shall not discriminate against
Tenant in enforcing the rules and regulations.


 


28.         LANDLORD’S LIABILITY. The
term “Landlord,” as used in this Lease, shall mean only the owner or owners of
the Building at the time in question. In the event of any conveyance and
provided that the transferee of Landlord assumes in writing all of the
obligations of Landlord under this lease from and after the date of such
conveyance of title to the Building, then from and after the date of such
conveyance, the transferor Landlord shall be relieved of all liabi8lity with
respect to Landlord’s obligations to be performed under this Lease after the
date of such conveyance. Notwithstanding any other term or provision of this
Lease, the liability of Landlord for its obligations under this Lease is
limited solely to Landlord’s interest in the Building as the same may from time
to time be encumbered, and no personal liability shall at any time be asserted
or enforceable against any other assets of Landlord or against Landlord’s
partners or members or its on their respective partners, shareholders, members,
directors, officers, or managers on account of any Landlord’s obligations or
actions under this Lease.


 


29.         CONSENTS AND APPROVALS.


 


29.1 [INTENTIONALLY OMITTED]


 


29.2 No Liability Imposed on Landlord. The review and/or
approval by Landlord of any intern or matter to be reviewed or approved by
Landlord under the terms of this Lease or any Exhibits or Addenda hereto shall
not impose upon Landlord any liability for the accuracy or sufficiency of any
such item or matter or the quality or sustainability of such item for its
intended use. Any such review or approval is for the sole purpose of protecting
Landlord’s interest in the Property, and no third parties, including Tenant or
the Representatives and Visitors of Tenant or any person or entity claiming by,
through or under Tenant, shall have any rights as a consequence thereof.


 


30.         BROKERS. Each party
warrants and represents to the other that in the negotiating or making of this Lease
neither the representing party nor anyone acting on the representing party’s
behalf has dealt with any broker or finder whatsoever who might be entitled to
a fee or commission for this Lease except Jones Lang LaSalle who represented
Tenant. Each party shall indemnify and hold harmless the other from any claim
or claims, including costs, expenses and attorney’s fees incurred by the
non-indemnifying party asserted by any other broker or finder for a fee or
commission based upon any dealings with or statements made by the indemnifying
party or its representatives. Tenant acknowledges that Tenant shall be solely
responsible for the payment of a brokerage commission or similar fees or
compensation for brokers representing Tenant. Tenant shall, however, have the
right to utilize a brokerage allowanced to be provided by Landlord of up to
$5.00 per rentable square foot of space in the Premises (the “Brokerage
Allowance”). Tenant shall elect to receive the Brokerage Allowance, if at all,
by written notice 


 


62

















 


to Landlord on or before thirty (30) days
after the full execution of this Lease. If and to the extent Landlord elects to
utilize the Brokerage Allowance, Base Rent over the initial Term of this Lease
shall be increased monthly to reflect the monthly amortized amount of such
Brokerage Allowance utilized by Tenant (amortized at eleven percent 11% per
annum) over the initial Term of this Lease.


 


31.         RELOCATION OF PREMISES
[INTENTIONALLY OMITTED]


 


32.         ENTIRE AGREEMENT. This
Lease, including the Exhibits and any Addenda attached hereto, and the
documents refereed to herein, if any, constitute the entire agreement between
Landlord and Tenant with respect to the leasing of space by Tenant in the
Building, and supersede all prior or contemporaneous agreements,
understandings, proposals and other representations by or between Landlord and
Tenant, whether written or oral. Neither Landlord nor Landlord’s agents have
made any representations or warranties with respect to the Premises, the
Building, the Project or this Lease except as expressly set forth herein, and
no rights, easements or licenses shall be acquired by Tenant by implication or
otherwise unless expressly set forth herein. The submission of this Lease for examination
does not constitute an option fro the Premises and this Lease shall become
effective as a binding agreement only upon execution and delivery thereof by
Landlord to Tenant.


 


33.         MISCELLANEOUS. This Lease
may not be amended or modified except by a writing signed by Landlord and
Tenant. Subject to Section 14-Assignment and Subletting and Section 28-Landlord’s
Liability, this Lease shall be binding on and shall inure to the benefit of the
parties and their respective successors, assigns and legal representatives. The
determination that any provisions hereof may be void, invalid, illegal or
unenforceable shall not impair any other provisions hereof and all such other
provisions of this Lease shall remain in full force and effect. The
unenforceability, invalidity or illegality of any provision of this Lease under
particular circumstances shall not render unenforceable, invalid or illegal
other provisions of this Lease, or the same provisions under other
circumstances. This Lease shall be constructed and interpreted in accordance
with the laws (excluding conflict of laws principles) of the State in which the
Building is located. The provisions of this Lease shall be constructed in
accordance with the fair meaning of the language used and shall not be strictly
constructed against either party. When required by the context of this Lease,
the singular includes the plural. Wherever the term “including” is used in this
Lease, it shall be interpreted as meaning “including, but not limited to” the
matter or matters thereafter enumerated. The captions contained in this Lease
are for purposes of convenience only and are not to used to interpret or
construe this Lease. If more than one person or 


 


63

















 


entity is identified as Tenant hereunder, the
obligations of each and all of them under this Lease shall be joint and
several. Time is of the essence with respect to this Lease, except as to the
conditions relating to the delivery of possession of the Premises to Tenant. Neither
Landlord nor Tenant shall record this Lease.


 


34.         AUTHORITY. If Tenant is a
corporation, partnership, limited liability company or other form of business
entity, each of the persons executing this Lease on behalf of Tenant warrants
and represents that Tenant is a duty organized and validly existing entity that
Tenant has full right and authority to enter into this Lease and that the
persons signing on behalf of Tenant are authorized to do so and have the power
to bind Tenant to this Lease.


 


35.         SIGNAGE.


 


35.1 Tenant shall have the right, at no additional cost to Tenant, to
display its corporate identification signs in prominent locations on any lobby
directory, monument signs, and at each entrance to the Premises. Provided that,
and for so long as, Tenant lease and occupies (without regard to any sublease
portion of the Premise) at least fifty percent (50%) of the office space in the
Building, Tenant shall have the right to install and maintain, at its sole cost
and expense, a parapel sign located on the roof or side of the Building and an
eyebrow sign located on the first floor level of the Building. All of Tenant’s
rights hereunder are subject to Tenant’s obtaining all necessary governmental
approvals and permits for such signage and subject tot Landlord’s prior written
approval of the design, size, color, location and all other aspects of such
signage, which approval shall not be unreasonably withheld, condition or
delayed. Tenant shall install and remove such signs in accordance with the
provisions of Article 6 (Alterations) hereof. Tenant shall at all times,
maintain all signs in good condition and repair and shall indemnify, defend and
hold harmless Landlord from any demands, suits, claims, damages, costs or
expenses, losses or liabilities (including reasonable attorneys’ fees and
costs) arising from or associated with the installation and/or maintenance of
such signs. Landlord agrees to reasonably cooperate with Tenant, at no cost to
Landlord, in pursuing the necessary approvals or permits for such signs.


 


35.2 Landlord and Tenant acknowledge and agree that the initial name of
the Project shall be “Foundry Square.”
Landlord hereby agrees that if and so long as Tenant leases and occupies more
than fifty percent (50%) of all of the office space in the Project, then
Landlord shall not have the right to change the name of the Project to the name
of any other tenant in the Project. Further, if Tenant leases and occupies all
of the office space in at least three (3) buildings of the Project, Tenant
shall have the right to change the name of the Project to a name which may
include the words “Sun Microsystems”
or other words selected by Tenant, subject to Landlord’s reasonable approval.


 


35.3 Tenant’s right under this Section 35 shall be personal to
Tenant and if Tenant requests any assignment of this Lease (except to an
Affiliate), Tenant’s rights under this Section shall not be transferable
to assignable without the express prior written consent of Landlord, which
consent may be granted, withheld or conditioned in Landlord’s sole and absolute
discretion.


 


36.         TELECOMMUNICATIONS
EQUIPMENT. Tenant shall have the non-exclusive right to install at its sole
cost and expense, satellite dishes on the roof of the Building at a location
reasonably acceptable to Landlord. Tenant shall install and remove such telecom
node and satellite dish in accordance with the provisions of Article 6
(Alterations) hereof. Tenant’s rights to install a satellite dish are and shall
be non 


 


64

















 


exclusive. Prior to any such installation (or
relocation) of any satellite dish by Tenant, Tenant shall furnish detailed
plans and specifications for the installation, including the proposed location
and method of attachment, to Landlord for approval, which approval shall not be
unreasonably withheld, conditioned or delayed. Any such installation shall be
attractively screened as may be required by Landlord or applicable governmental
requirements. Landlord may require use of a non-penetrating roof mount. If
reasonably requested by Landlord, a roofing company acceptable to Landlord
shall at Tenant’s expenses install an appropriate base upon which Tenant’s
instillation shall be mounted. All aspects and phases of Tenant’s installation,
including any antenna or camera and any associated electronic or other
equipment, wiring, conduit, roof mount and, base, shall at all times be subject
to supervision and approval by Landlord and Landlord’s consultants., which
consent shall not be unreasonably withheld, conditioned or delayed. All
approval and supervision rights of Landlord are intended solely to protect
Landlord’s interests; Landlord shall have no obligation to Tenant to exercise
any such power of supervision or approval. Tenant shall be responsible for
procuring prior to any installation and maintaining in force at all times
thereafter any and all consents, approvals, licenses and permits as may be
required for the lawful installation, use and operation of Tenant’s system.
Landlord makes no warranties or representations as to the permissibility of any
such installation by Tenant. All costs and expenses incurred in connection with
any such installation or proposed installation by Tenant, including any
reasonably necessary costs or expenses incurred in good faith by Landlord in
connection with review or supervision thereof, shall be borne by Tenant (and
Tenant shall within thirty (30) days after demand from Landlord pay or
reimburse Landlord for such costs and expenses). Tenant shall be permitted
access to the area on the roof where any such installation may be made as
necessary for the installation and maintenance thereof. Tenant shall at all
times and at Tenant’s sole expense be responsible for proper maintenance of any
such installation and all governmental permits and approvals required in
connection therewith (including compliance with any and all conditions attached
thereto). Any such installation and the roof area on which it is located shall
be deemed to be part of the Premises for purposes of Tenant’s insurance and
indemnification obligations under this Lease. Tenant may at any time, and shall
at expiration or earlier termination of the Term, if so requested by Landlord,
remove Tenant’s satellite dish, restore the building to the condition existing
prior to Tenant’s satellite dish, and repair any damage caused by Tenant’s
installation or removal of Tenant’s satellite dish.


 


65

















 


37.         ARBRITRATION. IN the
event of any bona fide dispute between Landlord and Tenant as to any matter
under this Lease, except with respect to any default by Tenant under Section 15.1(a) of
this Lease and except as may be expressly provided elsewhere in this Lease,
Landlord and Tenant hereby agree that such disagreement shall be finally settled
by binding arbitration pursuant to the Commercial Arbitration Rules then
in effect of the American Arbitration Association. The arbitrators shall
determine the rights and obligations of the parties according to the terms and
conditions of this Lease and the applicable laws of the State of California.
The decision issued by the arbitrators pursuant to this Section shall be
final and not subject to appeal. It is the intent of the parties that, barring
extraordinary circumstances, any arbitration pursuant to this Section shall
be concluded within sixty (60) days of the date such arbitration is first
initiated by one or both of the parties. Except as provided in Section 23.1
above, Landlord and Tenant shall each pay its own costs, including attorney
fees, incurred in preparing for and participating in the arbitration proceeding
and each shall pay one-half of the cost of the arbitrators. Any decision by the
arbitrators, shall be in writing, signed by the arbitrators and shall include
the reasons for the decision.


 


[Remainder of Page Intentionally Left Blank]


 


66

















 


IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as
of the date first above written.


 


	
  TENANT:

  	
  LANDLORD:

  
	
   

  	
  K3 FIRST STREET ASSOCIATES,

  LLC, a California limited liability

  company

  
	
   

  	
  By Howard Street Investors, LLC, a

  CA limited liability company, a,

  manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  SUNMICROSYSTEMS, INC., a Delaware

  	
   

  
	
  Corporation

  	
  By: KFRITZ Investors, LLC,a

  California limited liability company,

  its Manager

  
	
   

  	
   

  
	
   

  	
  By: WWA Investors, LLC, a

  California limited liability company,

  its Manager

  



 


	
  By:

  	
  /S/ Corey Wong

  	
   

  	
  By:

  	
  /S/ William Wilson III

  
	
  Director of Real Estate

  	
  Manager

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /S/ William Agrello

  	
   

  	
   

  	
   

  
	
  Sr. Vice President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /S/ Michael Morris

  	
   

  	
   

  	
   

  
	
  Sr. Vice President

  	
   

  	
   

  
	
  General Counsel & Secretary

  	
   

  



 


67

















 


EXHIBIT D


 


FURNITURE


 


68